Advanced Trust Drafting for Income Tax Minimization
EVENT DATE:
PRESENTER(s): Robert S. Barnett
This program has been approved NASBA & IRS CPE Credit 2(Taxes)
This course will provide estate planning counsel with a comprehensive understanding and application of best practices in tax planning and trust document drafting to minimize income tax consequences of trust income. The panel will provide a thorough review of the rules and practices covering inclusion of capital gains in distributable net income (DNI) for trusts and estates and other critical considerations for minimizing income taxes on trust receipts through careful structuring of the trust's governing instrument.
Description
Among the most critical tasks for estate counsel and planners is ensuring that trust documents are drafted to achieve the settlor's intent in the most tax-efficient means possible. Another significant challenge is to avoid or defer income tax. Estate planners must have a thorough knowledge of the drafting techniques and considerations available to reduce income tax consequences on trust income by carefully structuring trust documents.
Estate and trust counsel should always draft trust documents with a view toward clearly delineating between income and principal in a trust document. This is particularly critical in structuring those provisions that define and allocate DNI. Trust distributions are generally taxed at the beneficiary level, and drafters should always be mindful to include in DNI all income that can be passed through to beneficiaries with a lower tax impact than if retained within the trust.
This is also true for trusts that anticipate significant capital gains. Lower overall taxes will often be achieved if capital gains are included in DNI rather than added to the corpus amount.
Listen as our experienced panel provides comprehensive and practical details on drafting trust documents to minimize income tax consequences by including capital gains into DNI and other drafting practices for income tax minimization.
Outline
- Default capital gains treatment inclusion in the corpus
- Treas. Reg. Section 643(a)-3(b) provisions for including cap gains in DNI
- The instrument provides for inclusion in income
- Allocated to corpus but treated as a distribution
- Actually distributed
- Push-out provisions and prioritizing distributions
- Use of Section 678 withdrawal powers
- Non-tax considerations
- Drafting provisions for income tax minimization
The Speaker will review these and other key issues:
- What are the general requirements of IRC 643 on treatment of capital gains and FAI?
- How can the trust document be structured--and interpreted--to allow the inclusion of capital gains in DNI?
- What are local and state provisions that may allow capital gains inclusion in DNI?
- Income push-out provisions
- What are best practices for income tax minimization on trust accumulation?
- How to properly consider available tax elections.
Discussion Highlights
- Case Studies: Real-world examples of DNI-driven drafting.
- Audit Triggers: How the IRS scrutinizes trust income allocations.
- Q&A: Addressing complex scenarios (e.g., CRT drafting, state tax variations).
Credits and Other information:
- Recommended CPE credit – 2.0
- Recommended field of study – Taxes
- Session Prerequisites and preparation: None
- Session learning level: Basic
- Location: Virtual/Online
- Delivery method: Group Internet Based
- NASBA Sponsor: 146439
- IRS Course ID: PJGWS-T-00092-24-O
- Attendance Requirement: Yes
- Session Duration: 2 Hours
- Case Studies and Live Q&A session with speaker
- PowerPoint presentation for reference
Who Will Benefit:
- Estate Planning Attorneys
- CPA
- EA
- Trust Administrators
- Tax advisors seeking to optimize trust structures
