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Recent Updates in Estate Planning

Allison J. Shoemaker, CPA
Allison J. Shoemaker, CPA Director, Tax Strategies

Many people believe they don’t need an Recent Updates in Estate Planning estate plan because they are below the federal threshold of a taxable estate ($5,450,000 for 2016). However, you don’t need a multi-million dollar estate in order to benefit from estate planning – planning needs exist at all income levels. Below are a few items to keep in mind, as well as some recent updates.


The recent unexpected death of music icon Prince, who reportedly did not have a will, served as a reminder of the importance of having a will as part of your estate plan. Without one, the state takes conservatorship of the decedent’s assets and makes decisions on the dispositions of the assets, which may not coincide with the decedent’s wishes. Preparing a will helps ensure that your estate will be allocated the way you intended, not the government. Planning for the guardianship of your children is an important step in the estate planning process.

Portability Election

A law passed in 2010 and made permanent in 2012 adjusted an issue in which a married couple could possibly waste a portion of their applicable estate exclusion amount upon the first death of a spouse. Consequently, the act introduced the concept of portability with respect to the unused portion of the applicable exclusion amount of the predeceased spouse. This is referred to as the deceased spousal unused exclusion (DSUE) amount. To be applicable, the deceased spouse’s estate must make an election allowing the surviving spouse to use the DSUE on a timely-filed tax return. Note that the portability election does not apply to the generation skipping tax (GST).

Basis Consistency Rules

An estate’s executor must now furnish to the IRS, as well as each person acquiring any interest in property included in the decedent’s gross estate, a statement that identifies the value of each interest in property as reported on the estate tax return and any additional information that the IRS may require. The executor has 30 days after the filing of the estate tax return to provide this information and it needs to be retained by the beneficiary of the estate to establish their basis in inherited property. There will be penalties for not complying with the rules.

Private Foundations

In recent private letter rulings, private foundations that provide scholarships are permitted to limit scholarships to specific schools.  In final regulations, the IRS expanded the exceptions for certain types of investments from being treated as jeopardizing investments to a private foundation. Some examples of jeopardizing investments include trading in securities on margin, trading in commodity futures, working interests in oil and gas wells, puts, calls, straddles, warrants, or short sales. If the investments are considered to be program related investments (PRI), they are now exempt from the treatment as jeopardizing investments. A PRI is an investment designed to accomplish a charitable activity, with no intent to produce income or property appreciation.


In a pending court case regarding another deceased music celebrity, the value assigned to an intangible asset of the celebrity’s likeness and image by the estate’s executors is being disputed by the IRS. The executors used a very low valuation, while the IRS feels it should be much higher, especially when taking into account the subsequent income earned after the celebrity’s death. There is a large assessment of underestimated taxes as well as understatement and fraud penalties and interest associated with the revaluation by the IRS. The case is being closely monitored as the outcome may affect other celebrity estates and the valuation of their commercialization after their deaths. While not everyone is a music celebrity, the case offers an important reminder to pay close attention to proper valuation of an estate’s assets – tangible and intangible.

Allison J. Shoemaker can be reached at Email or 215.441.4600.


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Allison J. Shoemaker, CPA

Allison J. Shoemaker, CPA

Director, Tax Strategies

Investment Industry Specialist, Business Tax Specialist, Individual Tax Specialist

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