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The Narrowing “Tax Efficiency Gap”: Part IIThe Narrowing “Tax Efficiency Gap”: Part II

Post-gift asset exchange techniques

17 Min Read
The Narrowing “Tax Efficiency Gap”: Part II

In Part I of this article,1 we discussed the increased significance of the income tax consequences of estate planning in light of the American Taxpayer Relief Act of 20122 and the 3.8 percent tax on net investment income3 and highlighted the effect that a narrowing tax efficiency gap4 and a “permanent” $5 million estate tax exemption, indexed for inflation ($5.344 million for 2014), have had on the tax efficiency of lifetime gifts. We now turn to the various post-gift asset exchange techniques that can be used to maximize the tax efficiency of lifetime gifts by taking advantage of a step-up in basis in the gifted assets on the death of the donor.

 

Post-Gift Asset Exchanges

To mitigate the effects of a narrowing tax efficiency gap and a $5 ...

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About the Authors

Jay D. Waxenberg

Partner, Proskauer Rose LLP

 

Jay Waxenberg has been with the Personal Planning Department since 1984 and is co-Chair of the Department. A member of the firm’s Executive Committee, he focuses his practice on estate and tax planning and estate and trust administration.

Jay primarily represents individuals and their estates. He represents many families with significant multigenerational wealth, and has assisted them in the structuring of their estate plans so as to minimize gift, estate and generation-skipping taxes in the transmission of their wealth through several generations. He is involved in the full range of his clients’ economic and personal concerns, including closely held businesses, commercial and residential real estate holdings, artistic collections and philanthropy. In particular, Jay has helped his clients structure new business ventures, restructure existing ventures with an emphasis on shifting appreciation potential to younger generations, and has guided the sale and liquidation of businesses. He also has structured plans to enable client’s businesses to remain intact at their death, and to insure the desired continuity of ownership and control.

In addition to the tax consequences of estate planning, Jay focuses on the potentially sensitive family dynamics involved in representing individuals. He has the ability to explain complex tax matters in an understandable manner so that clients can make informed decisions about their assets. 

Jay has extensive experience in the area of life insurance planning. He frequently counsels individual clients and corporations concerning insurance policies and split-dollar arrangements.

As a member of our Fiduciary Litigation Group, Jay has been involved in will contests and other estate- and trust-related litigations. In addition, he has handled family matters, such as the preparation of prenuptial and postnuptial agreements. He regularly counsels individuals concerning charitable giving and advises private foundations and public charities on tax issues.

Before joining Proskauer, Jay was with United States Trust Company of New York and was a member of the Editorial Board of Practical Drafting, a quarterly estate planning journal. He regularly publishes articles on estate planning matters of interest.

Jay regularly speaks to professionals on estate planning. He has lectured on will drafting and estate tax audits for the New York State Bar Association, taught a course entitled "Estate Planning: Beyond the Basics" as part of the continuing legal education program of Fordham University School of Law, and has been a member of the faculty at Practising Law Institute programs entitled "Understanding Estate Administration in New York," "Understanding Estate, Gift and Generation-Skipping Transfer Taxes" and "Basic Estate Planning." He also has lectured on trust contests for the Archdiocese of New York and various estate planning topics for United States Trust Company, Bank of New York, HSBC Private Bank and Tiger 21.

Nathan R. Brown

Associate, Proskauer Rose LLP

 

Nathan Brown is an Associate in the Personal Planning Department, resident in the Boca Raton office. Nathan advises clients on a wide range of tax and estate planning matters, as well as estate and trust administration. He assists high net worth individuals and families develop suitable estate plans to maximize and protect the transfer of wealth to future generations.

Nathan is experienced in implementing advanced estate planning techniques, including irrevocable insurance trusts, grantor retained annuity trusts, sales to defective grantor trusts, inter vivos qualified terminable interest property trusts, family limited partnerships, all aspects of estate and trust administration and preparing Federal Estate Tax Returns.

In law school, Nathan received the Faculty Significant Achievement Award and the Outstanding Scholastic Achievement Award in Taxation, and in the process of earning his LL.M. he served as a Graduate Editor of the Florida Tax Review and received the Richard B. Stephens Award, given to the most outstanding student in the graduate tax program.