Podcast Summary: Jeff Levine on the Planning Tug-of-War: Income vs. Estate

Podcast: AICPA Personal Financial Planning (PFP)
Host: Carey Sinnett (AICPA & CIMA)
Guest: Jeff Levine, CPA, CFP, Chief Planning Officer at Focus Partners
Release Date: December 12, 2025

Episode Overview

This episode tackles the perennial dilemma faced by CPA financial planners: balancing immediate income tax planning against long-term estate tax considerations. Host Carey Sinnett invites Jeff Levine, a nationally recognized tax and estate planning expert, to unpack the “tug-of-war” between these two areas, especially as high net worth clients push for aggressive lifetime strategies that can collide with legacy planning goals. The conversation offers practical frameworks, timely insights, and real-world examples to help advisors navigate client-specific trade-offs, especially in an environment where high federal estate tax exemptions are flipping old wisdom on its head.

Key Discussion Points & Insights

1. The Fundamental Income vs. Estate Tax Conflict

Income Tax Planning: Focuses on current cash flow, lowering today’s tax bills, and maximizing after-tax wealth during life (e.g., Roth conversions, bonus depreciation, capital gains minimization).
Estate Tax Planning: Tends to delay or accept taxes now (e.g., choosing step-up in basis, leveraging exemptions, freezing asset growth outside the estate) in order to preserve wealth for heirs.

“It’s very difficult to at the same time plan for the same asset to minimize income taxes in the form of retaining a step up in basis and then also ... minimize future estate taxes.”
— Jeff Levine (04:07)

The Dilemma

Holding assets until death can secure a step-up in basis (good for heirs’ income taxes) but may expose more to the estate tax if over the exemption.
Gifting assets during life removes future appreciation from the estate (lowering estate tax risk) but deprives heirs of a step-up, sticking them with potentially higher capital gains.

2. Implications of the Current High Federal Estate Tax Exemption

As of 2026, the exemption is set to be $15 million per person, or $30 million per married couple.
For 99%+ of clients, income tax planning is now the bigger concern, not estate tax, due to the high exemption threshold.
Business owners or clients with uncertain (but potentially large) asset growth must still focus on estate tax risk.

“Today, more people than ever would be better served from a tax perspective, holding on to those assets inside their estate and getting a step up in basis.”
— Jeff Levine (07:32)

Advisors must re-evaluate old trust strategies and “bread-and-butter” tools like credit shelter trusts, as what was wise decades ago may now be counterproductive.

3. Revisiting Trust Strategies: Credit Shelter and Grantor Trusts

(12:50–18:41)

Credit Shelter Trusts (CSTs): Previously ubiquitous for estate tax minimization, but now may actually cost families due to lack of step-up in basis for assets inside them.
In some cases, legal maneuvers to bring assets back into a surviving spouse’s estate may now make more sense.
Appreciating assets may now be better placed in the surviving spouse’s name rather than in CSTs, to benefit from step-up.

“We may be better off spending through the money in the credit shelter trust. In many cases, we’re actually seeing clients ... get money out of a credit shelter trust ... so that there is a step up in basis.”
— Jeff Levine (10:27)

Grantor vs. Non-Grantor Trusts

Grantor Trusts: Income taxes are paid by the grantor, not the trust, keeping income tax brackets lower; preserves potential for tax-free growth inside the trust.
Non-Grantor Trusts: Income quickly hits the top trust tax bracket (~$15,500 of income), eroding after-tax wealth.
“Toggling” grantor status can give planners flexibility for future changes in law or family circumstances.

“The beautiful thing about a grantor trust is you can pay the taxes for the trust, which means the trust is continuing to grow basically tax free.”
— Jeff Levine (16:11)

Emphasis on flexibility in trust design – decanting, changing beneficial interests, and building adaptation into supposedly "irrevocable" structures to keep up with future tax law changes.

4. Aligning Stakeholder Goals When Interests Diverge

(20:20–23:39)

Real-World Family Issues:
- Differing beneficiary interests (e.g., one wants to keep, another to sell a business).
- Some clients prioritize personal outcomes over intergenerational savings; others look at holistic family tax minimization.
Advisors must facilitate deep, values-based conversations and not impose their own preferences.

“We can’t impose our preconceived notions on clients ... It’s their money, their assets, their businesses, whatever it may be — they've earned the right to make those decisions.”
— Jeff Levine (21:56)

Retirement Accounts Example

Roth conversions may make sense if heirs will be in higher tax brackets — but not all parents wish to increase their own current tax bill for their children’s later benefit.

Professional Competency

Planners must develop not just technical expertise but “human understanding” to lead these nuanced discussions.

“We have to become as technically advanced in human understanding as we are in planning.”
— Carey Sinnett (23:39)

Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote/Highlight | |-----------|---------|-----------------| | 04:07 | Jeff Levine | “It’s very difficult to at the same time plan for the same asset to minimize income taxes in the form of retaining a step up in basis and then also ... minimize future estate taxes.” | | 07:32 | Jeff Levine | “Today, more people than ever would be better served from a tax perspective, holding on to those assets inside their estate and getting a step up in basis.” | | 10:27 | Jeff Levine | “We may be better off spending through the money in the credit shelter trust ... so that there is a step up in basis.” | | 16:11 | Jeff Levine | “The beautiful thing about a grantor trust is you can pay the taxes for the trust, which means the trust is continuing to grow basically tax free.” | | 21:56 | Jeff Levine | “We can’t impose our preconceived notions on clients ... It’s their money, their assets, their businesses, whatever it may be — they've earned the right to make those decisions.” | | 23:39 | Carey Sinnett | “We have to become as technically advanced in human understanding as we are in planning.” |

Key Takeaways

You (Often) Have to Choose: For most clients, focus on income tax efficiency, but remain alert to future estate tax risks, especially with volatile or appreciating assets.
Revisit Old Estate Plans: The high federal exemption has upended much of the prior “default” planning wisdom.
Trusts Must Be Flexible: Optimal structures today may become suboptimal as rules and family needs change.
Client-Centric Approach: Ultimately, an advisor’s job is to help clients articulate, prioritize, and balance their values — not just minimize taxes.

Timestamps for Important Segments

00:02–03:33 — Framing the income vs. estate tax planning dilemma
04:07–09:26 — Understanding how federal exemptions shift the planning focus
09:26–12:50 — Impact of appreciating/uncertain-value assets; updating outdated trust strategies
12:50–18:41 — Trusts: compressed tax brackets, toggling grantor status, and need for flexibility
20:20–23:39 — Navigating diverging stakeholder goals; values-based financial planning

For further insights and access to technical resources, visit aicpa-cima.com/pfp.

Podcast Summary: Jeff Levine on the Planning Tug-of-War: Income vs. Estate

Episode Overview

Key Discussion Points & Insights

1. The Fundamental Income vs. Estate Tax Conflict

Income Tax Planning: Focuses on current cash flow, lowering today’s tax bills, and maximizing after-tax wealth during life (e.g., Roth conversions, bonus depreciation, capital gains minimization).
Estate Tax Planning: Tends to delay or accept taxes now (e.g., choosing step-up in basis, leveraging exemptions, freezing asset growth outside the estate) in order to preserve wealth for heirs.

“It’s very difficult to at the same time plan for the same asset to minimize income taxes in the form of retaining a step up in basis and then also ... minimize future estate taxes.”
— Jeff Levine (04:07)

The Dilemma

Holding assets until death can secure a step-up in basis (good for heirs’ income taxes) but may expose more to the estate tax if over the exemption.
Gifting assets during life removes future appreciation from the estate (lowering estate tax risk) but deprives heirs of a step-up, sticking them with potentially higher capital gains.

2. Implications of the Current High Federal Estate Tax Exemption

As of 2026, the exemption is set to be $15 million per person, or $30 million per married couple.
For 99%+ of clients, income tax planning is now the bigger concern, not estate tax, due to the high exemption threshold.
Business owners or clients with uncertain (but potentially large) asset growth must still focus on estate tax risk.

“Today, more people than ever would be better served from a tax perspective, holding on to those assets inside their estate and getting a step up in basis.”
— Jeff Levine (07:32)

Advisors must re-evaluate old trust strategies and “bread-and-butter” tools like credit shelter trusts, as what was wise decades ago may now be counterproductive.

3. Revisiting Trust Strategies: Credit Shelter and Grantor Trusts

(12:50–18:41)

Credit Shelter Trusts (CSTs): Previously ubiquitous for estate tax minimization, but now may actually cost families due to lack of step-up in basis for assets inside them.
In some cases, legal maneuvers to bring assets back into a surviving spouse’s estate may now make more sense.
Appreciating assets may now be better placed in the surviving spouse’s name rather than in CSTs, to benefit from step-up.

“We may be better off spending through the money in the credit shelter trust. In many cases, we’re actually seeing clients ... get money out of a credit shelter trust ... so that there is a step up in basis.”
— Jeff Levine (10:27)

Grantor vs. Non-Grantor Trusts

Grantor Trusts: Income taxes are paid by the grantor, not the trust, keeping income tax brackets lower; preserves potential for tax-free growth inside the trust.
Non-Grantor Trusts: Income quickly hits the top trust tax bracket (~$15,500 of income), eroding after-tax wealth.
“Toggling” grantor status can give planners flexibility for future changes in law or family circumstances.

“The beautiful thing about a grantor trust is you can pay the taxes for the trust, which means the trust is continuing to grow basically tax free.”
— Jeff Levine (16:11)

Emphasis on flexibility in trust design – decanting, changing beneficial interests, and building adaptation into supposedly "irrevocable" structures to keep up with future tax law changes.

4. Aligning Stakeholder Goals When Interests Diverge

(20:20–23:39)

Real-World Family Issues:
- Differing beneficiary interests (e.g., one wants to keep, another to sell a business).
- Some clients prioritize personal outcomes over intergenerational savings; others look at holistic family tax minimization.
Advisors must facilitate deep, values-based conversations and not impose their own preferences.

“We can’t impose our preconceived notions on clients ... It’s their money, their assets, their businesses, whatever it may be — they've earned the right to make those decisions.”
— Jeff Levine (21:56)

Retirement Accounts Example

Roth conversions may make sense if heirs will be in higher tax brackets — but not all parents wish to increase their own current tax bill for their children’s later benefit.

Professional Competency

Planners must develop not just technical expertise but “human understanding” to lead these nuanced discussions.

“We have to become as technically advanced in human understanding as we are in planning.”
— Carey Sinnett (23:39)

Notable Quotes & Memorable Moments

Key Takeaways

You (Often) Have to Choose: For most clients, focus on income tax efficiency, but remain alert to future estate tax risks, especially with volatile or appreciating assets.
Revisit Old Estate Plans: The high federal exemption has upended much of the prior “default” planning wisdom.
Trusts Must Be Flexible: Optimal structures today may become suboptimal as rules and family needs change.
Client-Centric Approach: Ultimately, an advisor’s job is to help clients articulate, prioritize, and balance their values — not just minimize taxes.

Timestamps for Important Segments

00:02–03:33 — Framing the income vs. estate tax planning dilemma
04:07–09:26 — Understanding how federal exemptions shift the planning focus
09:26–12:50 — Impact of appreciating/uncertain-value assets; updating outdated trust strategies
12:50–18:41 — Trusts: compressed tax brackets, toggling grantor status, and need for flexibility
20:20–23:39 — Navigating diverging stakeholder goals; values-based financial planning

For further insights and access to technical resources, visit aicpa-cima.com/pfp.

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Jeff Levine on the Planning Tug-of-War: Income vs. Estate

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Summary

Podcast Summary: Jeff Levine on the Planning Tug-of-War: Income vs. Estate

Episode Overview

Key Discussion Points & Insights

1. The Fundamental Income vs. Estate Tax Conflict

The Dilemma

2. Implications of the Current High Federal Estate Tax Exemption

3. Revisiting Trust Strategies: Credit Shelter and Grantor Trusts

Grantor vs. Non-Grantor Trusts

4. Aligning Stakeholder Goals When Interests Diverge

Retirement Accounts Example

Professional Competency

Notable Quotes & Memorable Moments

Key Takeaways

Timestamps for Important Segments

Summary

Podcast Summary: Jeff Levine on the Planning Tug-of-War: Income vs. Estate

Episode Overview

Key Discussion Points & Insights

1. The Fundamental Income vs. Estate Tax Conflict

The Dilemma

2. Implications of the Current High Federal Estate Tax Exemption

3. Revisiting Trust Strategies: Credit Shelter and Grantor Trusts

Grantor vs. Non-Grantor Trusts

4. Aligning Stakeholder Goals When Interests Diverge

Retirement Accounts Example

Professional Competency

Notable Quotes & Memorable Moments

Key Takeaways

Timestamps for Important Segments