Rescuing Unused Exemption With Upstream GPOA Planning
With the permanent federal estate tax exemption of $15 million, indexed for inflation, practitioners have had to shift the focus of planning engagements from estate tax reduction to income tax mitigation. Upstream general power of appointment (GPOA) planning techniques allow wealthier clients to obtain a favorable basis adjustment by causing appreciated trust assets to be included in the gross estate of an older relative who has unused federal estate tax exemption.
GPOA planning operates at the intersection of the income, estate and gift tax regimes to save clients significant income tax dollars from embedded capital gains. The success of the technique depends on genuine substance, careful structural safeguards, sufficient available exemp…
