Planning in a Changing Environment: Key Considerations for Advisors
Estate planning in today’s environment is no longer driven by a single objective. High exemption amounts, shifting income tax priorities, asset protection concerns, and increased scrutiny of trust administration have made planning more nuanced and, in many cases, more complex.
In this wide-ranging webinar, Martin Shenkman and Jonathan Blattmachr explores how advisors can rethink traditional approaches and adapt to a planning landscape where flexibility, documentation, and careful administration matter more than ever.
Non-Grantor Trusts, Access, and the Role of Adverse Parties
One of the central themes of the webinar is the growing interest in non-grantor trusts for income tax planning. The increased SALT deduction cap under the One Big Beautiful Bill Act (OBBBA) has made these trusts uniquely advantageous compared with traditional
grantor trusts. Shifting income away from high-bracket grantors is the name of the game:
Non-grantor trusts are separate taxpaying entities so each trust receives its own SALT
deduction limit and high-income taxpayers—especially in high-tax states—can create
multiple non-grantor trusts.
In particular, they focus on the importance of
properly defining and respecting the role of an adverse party when a spouse is a
beneficiary.
Simply including adverse-party language in a trust is not enough and a spouse is not
automatically an adverse party. The trust must be administered consistently with those provisions, approvals must be genuine and well documented, and distributions should not follow predictable patterns. Failure to respect these formalities could invite IRS scrutiny and accidentally create a grantor trust, destroying the intended non-grantor status.
Revisiting Existing Trusts and Basis Planning Decisions
The discussion also addresses the growing number of clients questioning whether long-standing irrevocable trusts still make sense in light of current exemption levels. While terminating a trust to obtain a basis step-up may seem appealing, the speakers caution that this approach often introduces new risks.
Trusts frequently serve purposes beyond estate tax savings, including asset protection, creditor shielding, and control over distributions. Alternatives such as decanting, dividing trusts, or using special powers of appointment may allow planners to capture basis benefits without sacrificing those protections.
Asset Protection Lessons from Recent Delaware Cases
Recent Delaware domestic asset protection trust cases provide important reminders that valid planning can still fail if administration is sloppy. Although the CES 2007 Trust was upheld under Delaware law, subsequent actions by the same taxpayer resulted in findings of fraudulent conveyance in another jurisdiction.
The takeaway is clear. Asset protection planning must be implemented early, administered carefully, and coordinated among all advisors. Courts will look beyond trust language to actual conduct, timing, and compliance with court orders.
Flexibility, Documentation, and Defensive Planning
Throughout the webinar, the speakers return to the importance of flexibility and documentation. As client priorities shift from estate tax avoidance to access, income tax efficiency, and asset protection, advisors must clearly explain trade-offs and document those conversations.
This includes addressing grantor versus non-grantor status, completed versus incomplete gifts, basis implications, and portability elections. Proper documentation not only improves client understanding but also serves as a critical defensive tool if decisions are later questioned.
Portability Still Matters
Despite high exemption amounts, portability remains a key planning consideration. The speakers highlight recent case law reinforcing that portability elections must be timely and complete. Advisors should continue to encourage filing estate tax returns even when no tax is due, as future law changes or asset growth could make preserved exemption amounts invaluable.
Key Takeaways
The webinar underscores that modern estate planning is less about following a default structure and more about tailoring solutions to a client’s evolving goals. Flexibility, thoughtful drafting, careful administration, and strong collaboration among advisors are essential to achieving durable results.
Watch the full webinar above to explore these topics in depth and gain practical insights you can apply in today’s planning environment.