Capital Gains and the Step-Up in Basis: Estate Planning Tactics, Compliance Traps, and Post-Death Planning Tools

Andrew Bechel | Greenspoon Marder LLP

Andrew Bechel is a partner in the International Wealth & Asset Planning practice group at Greenspoon Marder LLP. Mr. Bechel has significant experience aiding clients with complex estate planning matters, including international trust structures, asset protection, tax-exempt organizations, and tax planning. As part of his practice, Mr. Bechel works closely with clients to determine their goals with regard to their family assets, taxes, creditor protection, and related estate planning matters to develop bespoke structures that meet the client’s goals.

When developing these bespoke structures, Mr. Bechel has aided clients with the following: Utilizing various domestic trust structures to maximize the assets that clients can pass to lower generations free of estate and generation-skipping transfer taxes, setting up offshore trusts in jurisdictions such as the Cook Islands and Nevis, developing holding company structures for family businesses to ensure that these businesses are efficiently structured while maximizing creditor protection through the use of limited liability entities, utilizing trust structures to minimize state income taxes on the sale of a business, restructuring family businesses to take advantage of the Qualified Small Business Stock rules and the significant tax savings associated with Qualified Small Business Stock, and forming private foundations and navigating the complex rules applicable to the administration of these foundations.

When Mr. Bechel is not aiding clients, he enjoys spending time with his family, skiing, hiking, golfing, and playing guitar.

John Bunge | Holland & Knight LLP

John Bunge is a tax and private wealth services partner in Holland & Knight’s Nashville office. John helps clients navigate the confluence of tax planning, business succession planning and estate planning, and seeks to find the most elegant solutions possible to reach their goals. He frequently advises clients seeking to save taxes in connection with a business sale or other liquidity event. He also counsels families regarding the formation, structuring and operation of family offices and private trust companies. John earned his B.S. from the University of Kentucky, J.D. from the University of Alabama, and LL.M in taxation from the University of Florida. He is also a CFA charterholder.

Session I – Introduction to Basis Planning for the Estate Planner | 1:00pm – 2:00pm

• Getting to know basis step-up and fundamentals
  •  What is basis step-up
    1.  Summary of general basis step-up rules
  • What properties qualify for basis step-up?
  •  What about step-down?
• Estate planning and basis step-up
  • Capital gains taxes vs. estate taxes
  • Historical planning and how basis was considered
  • Impacts of OBBBA on planning
    1. The estate tax has effectively been repealed for all but wealthiest families, giving basis planning more prominence
•  Basis planning for new clients
  • Estate planning options where basis step-up is maintained
    1. ING trusts, DAPTs, granting GPOAs and other options
  • Options to stack multiple basis step-ups
• Basis planning options for clients that have already made significant gifts
  • Clients with taxable estates
    1. Ensuring high basis assets out of estate and low basis assets are in estate
    2. Determining how to move assets in and out of trusts that are already in existence, and potential need to amend or decant trusts to allow for this
  • Clients that do not have taxable estates
    1. Caution around unwinding structures that are already in place, issues that can cause
    2. Look into maximizing basis step-up based on existing structure through use of powers such as swap power, sales with grantor trusts, and related options
    3. Potential to amend trust through NJSA or decanting to ensure that we can engage in proper basis planning
    4. Granting GPOAs to individuals to maximize basis step-up
  • Beware of CCA 202352018 and related rulings/cases to ensure that plans do not result in inadvertent deemed gifts
• Practice going forward
  •  Estate planning practice going forward in light of OBBBA and new emphasis on basis planning

Break | 2:00pm – 2:10pm

Session II – Nuances of Tax Basis Step Up for Specific Asset Types and Post-Mortem Planning | 2:10pm – 3:10pm

• Tax basis step up planning for partnership interests, S corporation stock, and other unique assets
• Income in respect of decedent issues, including installment notes and depreciable property
• Basis step up for community property and foreign property
• Post-mortem planning and elections affecting tax basis