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Navigating the New Section 2704 Discount Valuation and Transfer Regulations: What Estate Planners Must Do Now

Recording of a 90-minute CLE/CPE webinar with Q&A

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Conducted on Tuesday, October 11, 2016

Recorded event now available

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This CLE/CPE course will provide estate planners and counsel with a critical first look at the newly proposed regulations under Section 2704. The panel will detail the contents of the new regulations, describe the likely impact of the change in valuation discount techniques, and offer practical guidance on what planners must do now in the context of making transfers of family-controlled or generated assets.

Description

On Aug. 2, 2016, the IRS issued long-anticipated proposed regulations under Section 2704 of the Internal Revenue Code that would make broad and significant changes to valuation of interests in family-controlled entities for estate, gift and generation-skipping transfer tax purposes. The new rules are intended to apply to both operating and non-operating family-owned or family-controlled entities and would eliminate or curtail many valuation discounts as well as some techniques estate planners currently utilize in connection with transfers of interests in such entities. Specifically, the new rules target lapses of voting or liquidation rights and eliminate some valuation discounting opportunities in determining the fair market value of a transferred interest.

The public hearing on the proposed regulations is scheduled for December 1, 2016. Certain provisions of the proposed regulations will become effective with respect to transfers that occur on or after the date the final regulations are published, and others will apply to transfers occurring 30 or more days after such publication. In particular, the latter period will apply to transfers of interests that are subject to restrictions falling into a newly defined category of “disregarded restrictions.” This could well mean that much current discount planning will become obsolete after this year. Estate planning counsel should consider accelerating planned sales or gift transfers so that these are completed this year, and advising clients that were on the fence to plan proactively now.

Listen as our experienced panel provides a critical first look at the newly proposed regulations and offers practical guidance on what planners should be doing now to assist clients in utilizing soon-to-expire valuation opportunities.

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Outline

  1. Contents of proposed 2704 regulations
  2. Asset structures that will be affected by valuation rule changes
  3. Structuring new transfers in the interim
  4. Evaluating existing structures for holding family assets
  5. Impact on tax apportionment clauses, estate equalization clauses
  6. Impact on buy-sell agreements and why they should be revisited for family controlled businesses

Benefits

The panel will discuss these and other important issues pertaining to the newly-proposed Section 2704 regulations:

  • What types of asset transfers are subject to the new regulations?
  • How will the proposed change in the treatment of lapses of voting or liquidation rights impact future transfers of family-owned assets into family limited partnerships or trust vehicles?
  • What is the impact of the changes to valuation discounts on transfer of closely-held businesses into estate planning vehicles?
  • What must estate planning attorneys and advisers do with existing transfers and operating documents to minimize the tax impact to clients of the new regulations?

Faculty

Susan Peckett Witkin
Susan Peckett Witkin
Partner
Blank Rome

Ms. Witkin concentrates her practice in the areas of trusts and estates and tax law. She advises clients in a wide...  |  Read More

Blase, James
James G. Blase, CPA, JD, LLM
Principal
Blase & Associates

Mr. Blase is the principal of the law firm Blase & Associates, LLC, in St. Louis, Missouri. He is also an adjunct...  |  Read More

Edwin P. Morrow, III, Esq.
Edwin P. Morrow, III, Esq.
Director, Wealth Transfer Planning and Tax Strategies
Key Private Bank Family Wealth Advisory Services

Mr. Morrow advises high net worth private banking clients on tax, trust and estate planning matters. He previously...  |  Read More

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