Tax Reporting Mechanics of Trust Decanting: Tackling Compliance Issues in the Absence of IRS Guidance

Determining Continuation-vs-New Trust, Identifying Gain Recognition Scenarios, Utilizing Elections, and Filing Requirements

Recording of a 110-minute CPE webinar with Q&A


Conducted on Monday, November 21, 2016

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers and compliance professionals with a comprehensive and practical guide to the reporting mechanics of trust decanting transactions. The panel will discuss when a decanting results in a non-reporting event, and offer useful tools for determining when a decanting causes either gain recognition or a transfer tax reporting and payment obligation.

Description

Trust decanting—the distribution of trust property from one trust to another trust—is a popular and frequently utilized vehicle for keeping estate plans current and tax efficient. Despite the growing prevalence of decanting as a strategy, however, the IRS has not provided authoritative guidance on proper tax reporting treatment of decanting transactions. Indications are that a definitive statement may not be forthcoming any time soon.

In addition to notification requirements, tax advisers and compliance professionals must deal with several key issues in reporting decanting transactions. Determining whether the second trust should be treated as an entirely new trust, or simply as a continuation of the first trust, has significant reporting consequences.

Another key issue is treatment when the decanting may generate gain recognition, such as in circumstances of distributions of negative-basis assets or creation of new powers of appointment in the second, beneficiary trust. Advisers must be certain to address the new vs. continuation question in reporting decanting transactions.

Listen as our experienced panel provides a thorough and practical guide to the tax reporting challenges and opportunities of decanted trusts.

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Outline

  1. IRS guidance re: decanting transactions
  2. Notice requirements
  3. Continuation of existing trust vs. creation of new trust
  4. Gain recognition scenarios
  5. Changing of situs
  6. Filing requirements

Benefits

The panel will discuss these and other important questions:

  • Under what circumstances is it preferable to treat the recipient trust as an entirely new trust, rather than as a continuation of the existing trust?
  • What is the impact of a decantment on tax attributes?
  • What decanting circumstances require gain recognition to either the distributing trust or the beneficiary/recipient trust?
  • What elections are available regarding gain recognition of decanted assets?

Faculty

Bryan D. Kirk
Bryan D. Kirk
Managing Director and Trust Counsel
Fiduciary Trust International of California

Mr. Kirk is a senior trusts and estates advisor for Fiduciary Trust, where he provides guidance on all aspects of...  |  Read More

Robert K. Kirkland
Robert K. Kirkland

President
Kirkland Woods & Martinsen

Mr. Kirkland works with a variety of individual clients, handling the preparation of wills, living trusts, durable...  |  Read More

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