Estate and gift taxes are imposed on the assets of individuals, and are therefore a common responsibility for tax professionals. Northeastern University’s Online Master of Science in Taxation can shape your understanding of this topic and prepare you with the necessary knowledge to provide the maximum benefit to your business and clients.
The importance of estate tax knowledge in 2019 and beyond
In 2017, Congress passed a sweeping tax bill commonly referred to as the Tax Cuts and Jobs Act. The tax changes as a result of this legislation were substantial. However, modifications to sections of the tax code related to estate and gift taxes were modest in comparison.
Though the breadth of tax reform in this area was small, the changes can still make a substantial difference for taxpayers. Tax professionals need to understand these regulations fully to provide comprehensive support to clients.
In 2018, only 5,219 households were subject to the federal estate tax. These families paid approximately $18.3 billion on estates valued at $107.8 billion. The Tax Cuts and Jobs Act increased the basic exclusion amount from $5 million to $10 million, indexed for inflation.
At the state level, many more families are subject to an estate tax. The majority of jurisdictions impose the tax on any household worth more than $1 million. State regulations vary widely, so it’s important that tax professionals have a firm grasp on tax laws at every level.
Understanding modern estate tax challenges
The fully Online Master of Taxation program from Northeastern University can equip you with the knowledge and skills to guide clients through complicated estate tax challenges. Suitable for working professionals, this program offers several courses that focus on estate planning and related wealth management strategies.
Here are some courses that will immerse you into the topic of estate taxation and prepare you for the field:
ACCT 5232 – Estate and Gift Taxation
This course focuses on the taxes common to the transfer of property and wealth. It will help you develop a broad knowledge base on topics such as:
- Gift tax deductions and exclusions
- Estate valuation
- State tax deductions and exemptions
- Tax rates
- Wealth transfer planning
Throughout this course, you can gain focused knowledge about the responsibilities of professionals who work with clients to ensure the proper disbursement of assets according to the wishes of a deceased party.
Beyond end-of-life financial planning, you’ll also learn about complementary tax subjects. For example, financial advisors often work with their clients to minimize taxes through excluded gifts and advanced financial instruments. Understanding which types of gifts may be excluded, which gifts qualify as charitable deductions, and where estate taxes apply is an essential part of taxation and financial planning.
Broadly speaking, fewer than half of all adult Americans have a wealth transfer plan in place, which means state laws determine how assets are distributed after death. Financial planners can use the knowledge gained throughout this course to guide their clients on how best to ensure their possessions pass to the intended owners. This service will become increasingly important as the massive baby boomer generation moves beyond retirement age.
ACCT 6248 – Income Taxation of Trusts and Estates
As a part of the taxation of individuals track, this course will walk you through the general rules for the taxation of estates and trusts. You’ll have the opportunity to gain knowledge in a variety of important subjects, including:
- Trusts distributing current income
- Grantor trusts
- Irrevocable trusts
- Charitable vehicles
- Income in respect of a decedent
- Estates and trusts accumulating income
- Estates and trusts distributing corpus
- Treatments of excess distributions and beneficiaries
There are many different types of trusts, each with unique functions, benefits, and challenges. These trusts may also differ slightly depending on the state in which they are established. One of the biggest differences geography can make is the rate at which a trust is taxed. Generally, states impose between 3 and 12 percent tax on accumulated income. However, Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming impose no state taxes on trust income.
With the knowledge gained from this course, you can provide actionable advice to clients on how to structure their plans to transfer wealth. For example, clients who wish to avoid probate after their death may want to establish a revocable trust, which allows individuals to transfer the title of a property over to the trust during their lifetime.
ACCT 6264 – Planning for Estate Tax Issues
This course is designed to provide students with a better understanding of advanced strategies for maximizing personal goals related to property passed from one generation to the next. You can learn about trusts versus will planning as well as other estate planning vehicles. Additional advanced topics include:
- Probate avoidance
- Tax minimization
- Asset protection
- Impact of employee benefits, trust, and their taxations
- Life insurance policies and associated annuities
Estate planners and financial advisors must be comfortable with life insurance policies, as they are present in almost every estate plan. Generally, a life insurance policy serves as a source of liquidity with which to pay expenses, certain taxes, and retirement funds, among others. When proceeds transfer to the policy beneficiaries, they may be subject to tax in specific circumstances; for instance, if the three-year rule is observed.
A deep understanding of life insurance and asset protection plans is necessary for anyone involved in estate planning—especially for estates worth more than $2 million. Smaller estates may benefit from other strategies for minimizing tax responsibilities. Having the confidence to provide actionable advice to clients is important for any position related to estate planning.
Expand your knowledge about wealth transfer planning
Recent changes to the federal tax code have made it essential to revisit your knowledge of complex taxation topics. Among them, estate planning represents a subject area that financial planners must understand completely. Having a comprehensive understanding of how estate and gift taxes fit into a broader taxation context will help you strengthen your ability to advise clients on this complex subject.
The Online MST program from the D’Amore-McKim School of Business at Northeastern University can teach you how to navigate the complex waters of estate planning. Learn more about the comprehensive curriculum in this fully online program today.