Certified Business Valuation Services and Merger & Acquisition Consulting

Improved IRS Guidelines to Avoid Federal Estate Taxes*

*Anchor Business Valuations & Financial Services, LLC are not attorneys, nor provide legal advice. From time to time in our blog entries we will share information that has crossed our desks that we believe our clients and potential clients might find beneficial in knowing (footnoted accordingly). As it pertains to estate and gift planning, Anchor has ~10 years of expertise determining the fair market value of assets…

The state and federal estate tax laws in the US have changed drastically over recent years and now, it is more important than ever to understand these laws to get benefits.

Estate taxes are a significant component that shapes the tax laws in the US. It is now easier than ever for families with significant wealth to acquire endless properties and mitigate federal estate taxes considerably.

Families and couples can retain tangible assets and engage with different trusts to reach desired objectives.

The improved IRS strategy called “Portability” is designed for high-net-worth couples who are married. The law is applicable for people with more than one marriage and if the second spouse has died only.

The IRS Portability Strategy

A spouse may inherit all the assets of their partner tax-free. Estate taxes are only levied depending on the total value of properties only after the living spouse passes.

Estate Plan Draft

Experts who draft estate plans, prepare master copies that only require minor or occasional updates. Planning for wealth transfer should be an active and attentive pursuit since it is an investment. Estate planning strategies should always be personalized based on the market conditions and regular law and family structural updates.

The Tax Cuts and Jobs Act enforcement is the latest highlight of inflection in the field of estate planning. This law gained motion in 2018 and has offered innumerable tax-savings opportunities for high-net-value families.

The Tax Cuts and Jobs Act law has doubled the rates for personal exemption of estate taxes. This is inflation adjusted with $11.58 million in 2022. The expiration date for the law is marked 2025. At this time, the exemption rates are expected to return to the original levels of 2017 which were set for $5.49 million for each individual along with a 2010-indexed inflation adjustment.

Wealthy families often have complex estate planning in place. Many asset holders are transferring properties to trusts or gifting them to beneficiaries for maximum advantage of higher exemption rates.

The new law for estate taxes has prompted a wave of innovative and influential estate planning strategies. For example, the “upstream planning” technique is dormant where the property-holder can gift existing assets to a parent who could write it back as a will for the original holder. The back and forth technique helps to reap the fruits of benefit under the tax rule. It is a boost in the basis of inherited asset costs that helps to erase the gains based on taxation laws. In order to obtain the fair market value of the asset in question, a certified valuation firm, such as Anchor Business Valuations, is engaged to arrive at an opinion of value.

For example, If you, as a property-holder, have invested $1 million in shares of stock purchased for $100,000 then your $900,000 gains are subject to selling the shares with capital gains taxes. However, if you share the asset with either parent, they could use estate tax exemption and would avoid taxes for the gift. The parents could later decide to gift the same shares, at the step-up in basis, to the original grantor. It is important to note that publicly traded stock value is determined by the public markets, whereas privately held stock does not have a readily available market, therefore a certified valuation expert must be hired to assign fair market value.

Often wealth transfer strategies have limitations. For instance, if your parent leaves behind the shares to other beneficiaries, they are equally eligible to contest for ownership claim. If the parent dies within the year of making the gift, the strategy could rebound and the increase would be disallowed. It is important to ensure that your parent and you, as property holders, fall directly under the US federal and state estate tax exemption laws.

It is crucial to be familiar with the basic estate planning strategies and tools to get maximum savings. To do so, Anchor recommends that every client considering an estate and/or gift transaction consult first with a qualified attorney before retaining valuation services.

In our next blog segment on estate planning, we will review highlights on how estate tax exemption planning strategies are subject to uncertainty.


BNY Mellon. 2022. Paid Program: Estate Planning Can’t Wait. [online] Available at: [Accessed 10 August 2022].

2022. [online] Available at: [Accessed 10 August 2022].

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