New IRS Regulations | Regular Estate Plan Reviews

by Legacy Plan Jan 3, 2017

Uncle Sam's arm holding out the April 15 tax deadline

Summary: In August 2016, the U.S. Internal Revenue Service proposed new regulations that could have a dramatic impact on the estate plans of a certain group of people. Whether you are or are not in the group of people who might possibly be affected by these changes in the statutes and regulations, the proposed change is instructive in that it reminds everyone of the importance of  a periodic estate plan review. By having an estate plan review regularly, you can be sure that your plan remains optimized based upon the current state of the law, even after changes are enacted.

The proposed new IRS regulations would affect a specific section of Internal Revenue Code (Section 2704) that can have a role in certain estate plans. The new regulations, if they are enacted without additional changes, would diminish the effectiveness of certain tools used in estate plans geared toward reducing or eliminating death tax obligations. This creates an urgency for an estate plan review.

For people who have estates large enough to exceed to the federal estate tax exemption amount, planning to avoid or minimize the impact of federal estate taxes is an important part of estate planning. In order to plan to avoid or minimize these taxes, estate planning professionals and their clients have used various mechanisms. For families that have planned using LLCs or family limited partnerships, the new regulations would “permanently and profoundly change estate planning,” according to the National Law Journal.

You might also find yourself thinking, “I’m not rich… I shouldn’t have to worry about federal estate taxes, should I?” While the current federal estate tax exclusions are relatively high, that doesn’t necessarily mean that only rich people potentially face federal estate tax obligations when they die. In some situations, small business owners and family farmers could find their estates over the limit and their loved ones left with a hefty estate tax bill after they die.

Of course it is possible that your first reaction might be, “I don’t have an LLC or a FLP… why should I care?” The reason comes down to one thing… options. In estate planning, there are often multiple different vehicles available to get you to where you want to go, regardless of what your individual estate planning destination is. Your estate planning attorney can help by taking the facts about you and your estate plan review, alongside your goals and objectives, and analyzing them in terms of the relatives benefits and drawbacks of each estate planning tool available to you. A substantial change in the IRS regulations governing death taxes and estate planning may alter what type of planning vehicle is best for you.

tax documents being signed

Even if you are not rich, not a small business owner, not a farmer and generally unlikely to have an estate tax obligation when you die, the proposed new IRS regulations still serve as an important warning to you when it comes to estate planning. Many things that could impact your estate plan can potentially change in quick fashion. One of these possibilities is changes to the law. Changes in the applicable laws or regulations may fundamentally alter the analysis regarding what works best for you in terms of estate planning. If you make the mistake of simply executing a plan and never reviewing it, you may end up with a plan designed to function under a legal landscape that no longer exists by the time of your death.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at

This article published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone) (email)

Legacy Assurance Plan Company Logo

<< Prev Next >>