Estate Planning

many documents, and often requires input from advisers in different disciplines: attorneys, wealth advisers, accounting professionals, appraisers, life insurance agents, and others. Sometimes, planning is rushed, and despite our best efforts, things might be missed.

During the gift tax return preparation process, the preparer will have the opportunity to review the documents and hopefully identify anything that might have been missed or need correcting – before the IRS is alerted about the plan. The preparer can then reach out to other advisers to make the necessary corrections so that the gift tax return –and the planning – is complete.

4. A gift tax return preparer could identify additional steps to bolster the plan.

Recent cases decided by the Tax Court (against the taxpayers) highlight additional steps that taxpayers could take to fortify the planning that had been done. An accounting professional preparing a gift tax return might be particularly well-situated to identify these opportunities: a. Issue a Schedule K-1 from an entity that was transferred as part of the estate plan; b. Use the income tax returns to identify any valuation adjustments that might later be made to the plan if values are changed on audit; c. Make sure that distributions are being made and that the correct taxpayer pays the income tax.

Implementing these steps might be done as part of the gift tax return preparation process. As planning gets more complicated, explaining transactions thoroughly on a gift tax return and supporting it with attendant documents could make administering the plan easier.

Conclusion

Creative planning approaches have created additional and sometimes novel gift tax reporting considerations. Disclosures should be carefully constructed. Preparing a gift tax return is a vital step in the planning process to protect clients and fortify their estate plans.

About the Author

Joy Matak, JD, LLM is a Partner at Sax and Leader of the firm’s Trusts and Estates Practice.

She has more than 20 years of diversified experience as a wealth transfer strategist with an extensive background in recommending and implementing advantageous tax strategies for multigenerational wealth families, owners of closely-held businesses, and high-net-worth individuals including complex trust and estate planning. Joy can be reached at jmatak@saxllp.com