Proposed Clawback Regs May Undermine Some Estate Planning

Recently issued proposed clawback regulations (Proposed Treasury Regulations Section 20.2010-1(c)(3)), (the proposed regs) may undermine the planning your clients completed over the past few years to address the coming reduction in the estate tax exemption or the then feared tax law changes. While the proposed regs aren’t as harsh as some had feared, they undermine some common planning approaches that have been used in recent years.  On the bright side, the proposed regs shouldn’t prevent taxpayers who made gifts to take advantage of the current higher exemption amount to spousal lifetime access trusts (SLATs), or self–settled domestic asset protection trusts (DAPTs) that were structured to be completed gift trusts, from securing those exemption amounts (assuming other aspects of the planning are respected). The proposed regs, however, provide complex rules that will change the anticipated results of several other estate-planning arrangements that had been intended to use the exemption.  

See: https://www.wealthmanagement.com/estate-planning/proposed-clawback-regs-may-undermine-some-estate-planning