Citrin Cooperman joined Enea, Scanlan & Sirignano, LLP for a webinar discussion.

1. Estate & Gift Tax Planning
That you Should Consider
Before the Election
Mandeep Trivedi, CFA,
ASA
Principal
Citrin Cooperman
Anthony J. Enea, Esq.
Member
Enea, Scanlan &
Sirignano, LLP
Heather Oboda,
CPA, MBA
Partner
Citrin Cooperman

2. About Us.
 Federal Tax
Exemptions
 Valuation of Assets &
Discounts
 Changes in NY
Medicaid Planning
Rules

3. ThePerfect
Storm
5
Factors
What Makes 2020 So Unique?
There are five
factors working
in tandem in an
almost “perfect
storm” to make
this opportunity
worthy of your
consideration

4. $11.58
Million
for
Individuals
The size of the life
estate and gift
exemption, the
amount of wealth
you may transfer
without out gift or
estate tax, is at its
highest ever
1. The Life Estate and Gift Exemption
$23.16
Million
for
Couples

5. Now is
the Time
2. The Election
The exemption is a likely to be
reduced in the event of a
leadership change in Washington
DC in early 2021 and set to
expire if unchanged in 2026

6. Time sensitive
opportunity in 2020
The IRS has
indicated that in the
event the current
tax law changes it
will not be
retroactively
applied to transfers
already made under
the current law
USD
The
3. No Retroactive ApplicationText Here
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7. 4. Interest
Rates at
Historical Lows
Interest rates are historically low –
which means application of many
planning tools are even more
attractive

8. Growth & Cash Flow
Risks
Valuation Approaches
Discounts
What Drives Value
What Derails Value
Impact on Valuation Exercise
Allowable Valuation Adjustments
The Covid Impact
5. Valuations

9. 21The Right
Advisors
4
The Right
Value
The Right
Plan
3
The Right Legal
Documents
The Process
Estate and Gift Tax Planning

10. Utilizing your Available Estate and
Gift Tax Exemptions during your
Lifetime

11. Outright Gifts
• Gifts of one’s personal exclusion amount of $15,000 per
person per year
• Gifts of more than $15,000 per person per year utilizes
part (or all) of one’s lifetime gift tax exemption amount
of $11.58 Million
• Outright gift for payment of one’s education / medical
expenses without limitation as long as payment is made
directly to the financial institution without utilizing ones
available exemption.
▫ Example: Gift by Husband & Wife to a child of $500,000
 $30,000 is gift tax free
 $470,000 is a taxable gift
 Each spouse will file a gift tax return and use $235,000 of their
lifetime exemption of $11.58Million for 2020

12. Outright gifts to Trust
• Making outright gifts to an “Irrevocable Trust”
for the benefit of a child, grandchild, loved one
or friend.
▫ Again, the same personal exclusion on an annual
basis is available
 Use of a “Crummey Letter” is required
 Notice from the Trustee that a deposit to the Trust has
been made giving the beneficiary a right to make a
withdrawal
▫ $11.58 Million Estate and Gift Tax Exemption
available

13. Outright Gifts to Trusts continued
• NY does not have a Gift Tax
• Trust income & principal is available as decided
by the creator / grantor of the Trust for the
benefit of the Beneficiary
• Creator (grantor) can be as broad or specific as
they wish as to how the income / principal is to
be utilized and for how long (for the lifetime of
the beneficiary or until a certain occurrence of a
specified event)

14. Estate tax planning in one’s
Last Will and Testament or
Revocable Living Trust
• What is the difference between a Will and
Revocable Trust(RLT)?
▫ Probate v. Non Probate
▫ Will controls assets in Decedent’s name alone
▫ RLT controls assets titled to the Trust
▫ RLT is created during one’s lifetime
 Creator (grantor) can also act as Trustee and have
full control over trust during lifetime
▫ RLT is a private document
▫ Tax planning options available in a Will are the
same as those available in an RLT

15. Estate Tax Planning:
Credit Shelter Trust Provision
• On death of first spouse to die, the assets (held in their name alone) are
placed into the credit shelter trust for surviving spouse.
• If 1st spouse to die has $11.58Million of assets in their name alone in
2020, that amount would go into the credit shelter trust for the benefit of
the surviving spouse.
▫ If the assets in the name alone of the first to die exceed the available exclusion
amount, the excess can go into a trust qualifying for the unlimited marital
deduction or outright to the surviving spouse
• This is a good option for those in second marriages or blended families
• The Credit Shelter Trust is Irrevocable, as well as the Trust qualifying for
the marital deduction
• Equal division of assets equally is important
• Use of Credit Shelter Trusts is presently less common due to high federal
exemption and portability of federal exclusion amount
• Assets remaining in the Credit Shelter Trust upon the death of the surviving
spouse will pass estate tax free to the beneficiaries
• Assets remaining in the qualifying marital deduction trust are taxable as
part of the surviving spouse’s estate (estate tax essentially deferred until
death of surviving spouse)

16. Disclaimer Trust Provision
• Qualified Disclaimers governed by Section 2518 of
the IRC
• LWT or RLT gives one’s entire estate to surviving
spouse, however, spouse can decide whether to take
the entire amount, or a partial mount, outright, with
the balance being disclaimed by the surviing spouse
and the amount disclaimed being distributed to a
disclaimer trust for the surviving spouses benefit.
▫ Payment of income in the Trust can mandatory or in
the discretion of the Trustees
▫ Spouse can be involved in decision to pay / not pay
income, however, only the disinterested trustee can
make payment of principal to the surviving spouse

17. Qualified Disclaimer
• For a disclaimer to be qualified for Estate tax
purposes it must be received by the estate’s or trust’s
legal representative and filed with the Surrogate’s
Court no later than 9 months after the later of the
date on which the transfer creating the interest in
such person is made or 9 months after the day on
which such person attains age 21
• The recipient must not have accepted the interest or
any of its benefits
• Then interest passes without any direction on the
part of the person disclaiming
• If requirements are met the person disclaiming is
not treated as a done for estate, gift or GST Tax
purposes and will not be treated as having made a
gift to the successor done or trust

18. Flexibility of Qualified Disclaimer
• Disclaimer’s primary advantage is its flexibility
• Surviving spouse makes decision to accept spouse’s
estate based on current available information at the time
of the spouse’s death relevant to the size of the
decedent’s estate, the size of the surviving spouse’s estate
and the applicable estate tax exemption available.
• Does not work well in second marriage or a blended
family situation
• Division of assets between husband and wife is also
advisable and important when utilizing a disclaimer trust
• Disclaimer trust, once funded is irrevocable

19. Spousal Lifetime Access Trust (SLAT)
• Useful for wealthy couples to reduce estate, gift and
generation skipping (GST) taxes and protect assets
• SLAT’s are irrevocable and structured to avoid
inclusion in spouse’s estate
• One spouse transfers/gifts assets to the SLAT and
the beneficiary can be their spouse and even
children and grandchildren
• The donee spouse has access to the assets in the
SLAT as a discretionary beneficiary. Therefore, the
donor spouse may receive, indirectly, access to the
trust property.

20. SLATs continued
• SLATs are a flexible planning tool
• Need stable and secure marriage
• Creditor protection is available for Donor’s spouse
• Excellent way to reduce donor spouse’s estate
• Utilizes current available estate and gift tax exemptions
• Depending on situs selected for SLAT it can avoid the
Rule Against Perpetuities in New York
• Must be careful to avoid application of Reciprocal Trust
Doctrine (where IRS views trust as an arrangement
between spouses to create self-settled trusts)
• Often corporate trustees are used

21. Using Trusts to Protect Assets from the Cost of Long Term Care
Irrevocable Medicaid Asset Protection
Trust
• Benefits:
▫ 5 years after transfer occurs property and assets are
protected for Nursing Home Medicaid eligibility purposes
▫ 2 and ½ years after transfer occurs property and assets are
protected for Home Care Medicaid eligibility purposes
▫ The transfer allows the transferee to receive the premises
with a stepped up cost basis upon the death of the
transferor, through the reservation of the life estate to the
grantor
▫ Allows property to be sold during transferor’s lifetime
without income tax consequences
▫ The personal residence exclusion of $250,000 if single, or
$500,000 if married, is still available

22. Medicaid Asset Protection Trusts
• Detriments
▫ The transfer is a taxable gift of a future interest
▫ No annual exclusion is available
▫ If a limited power of appointment is retained, the
gift to the trust is incomplete
▫ The assets are still includible in the Grantor’s
taxable estate
▫ Planning should be considered early- when one is
healthy and not likely to need long term care at
home or in nursing home.

23. Contact Information
Mandeep Trivedi, CFA, ASA
Principal, Citrin Cooperman
Tele: 212.697.1000
E-mail: mtrivedi@citrincooperman.com
Anthony J. Enea, Esq.
Member, Enea, Scanlan & Sirignano, LLP
Tele: 914.948.1500
E-mail: a.enea@esslawfirm.com
Heather Oboda, CPA, MBA
Partner, Citrin Cooperman
Tele: 914.949.2990
E-mail: hoboda@citrincooperman.com

24. Thank You