PHILADELPHIA – The Delaware Valley Industrial Resource Center (DVIRC) has been awarded a $1M contract by BlueForge Alliance to address the urgent demand for increased workforce and capacity in the U.S. Submarine Industrial Base (SIB). DVIRC will create and deploy a regional strategy and taskforce to spur enterprise engagement, elevate opportunities to expand capacity, and connect more people to the mission across Southeastern Pennsylvania’s defense industrial base workforce. 

“The U.S. Navy and its civilian workforce are building the most advanced sea-based strategic deterrent the world has ever known. DVIRC is both honored and humbled to help find and contribute some of the additional workforce and manufacturing supply chain capacity needed to achieve the required submarine cadence,” said Chris Scafario, President & CEO, DVIRC. 

“The Navy is on a generational journey to recapitalize its sea-based strategic deterrence and to guarantee a capable and enduring undersea presence in times of peace and conflict,” said Rear Admiral Scott Pappano, Program Executive Officer, Strategic Submarines. “Achieving that goal means strengthening supply chains to ensure America’s submarine industrial base has the capability, capacity, and skilled workforce to maintain our existing fleet and manufacture one Columbia and two Virginia class submarines per year beginning in Fiscal Year 2028— which amounts to a five-fold increase in submarine construction rates.”

“With its talented manufacturing workforce, concentration of key suppliers, and history as a maritime center of gravity, the Delaware Valley region is a big part of making that happen,” Admiral Pappano concluded. “I thank the DVIRC for partnering with us on this no fail mission.”  

DVIRC supports more than 5,500 manufacturers within Southeast Pennsylvania. About 25 percent currently support the defense industrial base. This award will help increase the number of current manufacturing suppliers and strengthen all companies, including an expanded and trained labor market, targeting underserved populations, modernized and technical capabilities, and best in class product and process improvements. 

“It is estimated that as much as 20 percent of the Columbia-class supply chain will come from the surrounding regions of the Delaware Valley. The growth associated with this historic program is likely to spawn a revitalization of our regional manufacturing base, create thousands of family sustaining careers in manufacturing and contribute hundreds of millions of dollars in value added impact for our region,” Scafario went on to say.

To learn more about this initiative and to stay informed about DVIRC’s upcoming events, community outreach or program specific tools, visit www.dvirc.org. To increase awareness of and excitement about shipbuilding and submarines, visit www.buildsubmarines.com.

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About DVIRC 

DVIRC is a manufacturing consulting firm, advocate and economic development organization supporting the profitable growth of small and mid-sized U.S. manufacturers. We support manufacturers through consulting services, advanced technology research, training and education, and executive network groups.  Since 1988 we have served more than 2,000 manufacturers regionally and nationally, as well as numerous federal agencies, generating over $2 Billion in client impact. For more information visit www.dvirc.org. 

About BlueForge Alliance
BlueForge Alliance (BFA) is the nonprofit, neutral integrator that supports the U.S. Navy’s Submarine Industrial Base (SIB) initiatives and efforts to strengthen and sustain the maritime manufacturing sector.  BFA is a critical partner in the SIB’s mission to ensure industry has the capability, capacity, and resilience to build and maintain America’s next generation of undersea platforms. The organization’s team of experts in a variety of disciplines focus on addressing critical workforce, technology, and supplier development needs. BFA is headquartered in Bryan/College Station, Texas. For more information, visit www.BlueForgeAlliance.us. 

About the Submarine Industrial Base
The submarine industrial base is a vital part of the United States’ national security. For decades, this skilled and patriotic group of industry partners have provided critical components, products and services to ensure the design, construction, maintenance and modernization of the U.S. Navy submarine fleet. The millions of hands that ultimately build these great vessels hail from every state in the country, and a vast network of over 16,000 suppliers that range from small, family-owned businesses to vast shipbuilders. The industrial base’s dedication to the mission and continued innovation have enabled the Navy to stay ahead of the curve and anticipate needs, providing a strategic advantage and a fundamental differentiator in the defense of the nation.

2030 Manufacturing Moonshot

We must think differently about the future of US manufacturing throughout the Delaware Valley and across the nation. We have to be bold in our planning and executing this renaissance.

As such, DVIRC’s mission has evolved. I believe that it is on us to reimagine manufacturing’s role in the creation of regional economic prosperity and to strengthen and accelerate America’s industrial competitiveness across key sectors.  

We will execute on our mission through: 

• Strategic workforce initiatives.
• Advanced technology integration and commercialization.
• Deploying supply chain resiliency best practices.
• Providing access to capital, expertise, and growth opportunities; and
• Supporting regional manufacturing business retention and expansion.

Working together with our partners in business, academia, and government, we are creating one of the most passionate and purpose-driven manufacturing clusters in the world.

Our Moonshot

We believe that Southeastern Pennsylvania can be a globally recognized technology and innovation launch pad for advanced manufacturing. Our vision is expressed through our Manufacturing Moonshot: 

By the year 2030 DVIRC and our partners will…

Connect the brightest minds, most advanced technologies, and boldest innovations.

Transform Southeastern Pennsylvania into a globally recognized hub for advanced manufacturing excellence.

Design and build next-generation, life-sustaining, life-enriching, and life-defending goods, services, and technologies, and

Create family-sustaining careers, a thriving regional economy, and the benchmark for an American Manufacturing Renaissance.

Working Together to Advance our Region

DVIRC’s Manufacturing Moonshot will require focused and sustained efforts aimed at accelerating regional innovation and advanced manufacturing technology adoption, within an ecosystem of over 5,500 entrepreneurial startups and established small- and midsized manufacturing firms (SMMs) located in Southeastern Pennsylvania. 

Accelerating the rates of innovation, technology adoption, and market expansion means bridging the gap between a change-adverse and often introverted current state within many SMMs, to a desired future state in which access to regional growth initiatives, business best practices, emerging trends, a stronger peer network, and a diverse talent pool provides increased awareness around—and an on-ramp to—sustainable growth opportunities. 

Though simple in theory, the broad initiatives required to bridge such a gap on a grand scale will necessitate an expansion of existing public-private partnerships, and better alignment and collaboration between stakeholders in business, academia, government, and economic development communities. 

We are especially proud of our recent contract award from Blue Forge Alliance to help address the intense and urgent demand to build capacity for the U.S. NAVY’s regional Submarine Industrial Base (SIB); see the press release featured in this newsletter.

DVIRC efforts will focus on the creation and deployment of a regional strategy and task force that will spur enterprise engagement and support to enhance the skill sets and capacity of the defense industrial base workforce across Southeastern Pennsylvania. 

DVIRC supports over 5,500 manufacturers within Southeastern Pennsylvania, 25% of which currently support the defense industrial base.  This award will help DVIRC to increase the number of current manufacturing suppliers and strengthen all companies, expand access to a trained labor market, engage and support underserved populations, modernize manufacturer’s technical capabilities, and implement best-in-class product and process improvements. 

Our region has tremendous opportunities. By working together and using our unique assets we will ensure a bright future for generations to come. 

The DVIRC PA Dream Team had the pleasure of meeting with the Girls Inc.’s Early Grade Literacy program (Discovery) on Saturday, January 13, 2024.

At Girls Inc., girls learn to set and achieve goals, boldly confront challenges, resist peer pressure, see college as attainable, and explore nontraditional fields such as STEM. The Discovery program is designed for girls in grades K-3 and inspires all girls to be strong, smart, and bold.

Lisa Miller, Automation Engineer with Greene, Tweed, met with 12 eight-year-old Discovery girls to talk to them about STEAM. Lisa read the book Ada Twist, Scientist, and was able to engage the girls in thoughtful questions regarding the topics of science and manufacturing.

DVIRC also left behind an Advanced Manufacturing coloring book that the girls were able to take home with them.

For more information or to request a PA Dream Team Ambassador presentation, contact our Director of Workforce Engagement, Hannah McGarry, at hmcgarry@dvirc.org, or call 267-892-0569.

We are excited to present Ken Baker, the latest addition to DVIRC’s board of directors. Ken is the CEO of NewAge Industries, a 100% employee-owned and B Corp Certified fluid transfer company. He brings nearly 40 years of experience to the board, including the manufacturing of tubing/hose and fitting, high purity fluid flow solutions, and RFID technology, both domestically and globally. In our conversation with Ken, we discuss his commitment to employee ownership, the remarkable 70-year evolution of NewAge, and his insights into the significance of the manufacturing sector. 

Congratulations on recently joining DVIRC’s Board of Directors. What prompted you to devote your time and talent to this organization? 

My advocacy for employee ownership led me to contact DVIRC’s president, Chris Scafario. Our discussions revealed a shared enthusiasm for employee ownership. Chris appreciated my perspective and was excited by the initiatives we have going on at NewAge as we seem to share a lot of the same visions for the future of manufacturing. Chris asked me to join and I accepted—that’s how my journey on the board began. 

Speaking of employee ownership, can you expand on why you believe it makes a successful business model? 

I think employee ownership is the right thing and the right capitalist way of doing business. My introduction to the model dates back to the mid-’90s when a seminar highlighted its potential. The appeal was in aligning everyone in a company toward a common goal. This unity, where success meant shared benefits, struck me as profoundly logical.  

In 2006, I put my big toe in the water by allocating 30% of company shares to employees, or what’s known as an Employee Stock Ownership Plan (ESOP). The positive changes at NewAge were evident, and over time, as we became known as an employee-owned company. The move to ESOP significantly helped hiring efforts, employee retention, and overall process improvement, especially in contrast to private equity models in our space. Genuine care for employees is how you achieve a high-performance team. 

NewAge is impressively nearly 70 years old. How has the company evolved over the years? 

Oh, my gosh. Tremendously. NewAge’s first product line was metal hardness testing equipment imported from Italy. In the early ’60s, a fortuitous meeting led us into PVC tubing and hose, although we still weren’t making anything at that time. Over the years, we diversified, adding tubing lines and expanding into manufacturing in 1990. We ventured into high-purity silicone tubing for the pharma and biotech industries in 2000, marked by the sale of our hardness testing group. This allowed me to spend more time and concentration on the tubing product line. The subsequent decades saw further expansion into molding and assembly, and the introduction of ESOP in 2006. The strategic decision for a second site in 2000 and global expansion reinforced our commitment, notably during the pandemic as we heavily utilized the new facility to service the companies that were making the vaccine. 

What do you envision for the next 100 years? 

NewAge will not be sold. We will remain a 100% employee-owned, privately held company, leading in fluid transfer for pharmaceutical, biotech, and industrial applications 100 years from now. Our global footprint will expand, centered around the Netherlands, addressing the needs of the European and Asian markets. 

What is it about your company and value proposition that makes NewAge unique to your employees, customers, and the markets you serve?  

Quality is non-negotiable—you won’t compete without it but you won’t be distinct with it. NewAge’s differentiator lies in how we handle challenges. We set ourselves apart by being customer-centric: we are flexible, attentive to detail, and responsive to customer needs, not cookie cutter solutions. During the pandemic, our approach to cancellations—allowing for flexibility when other companies didn’t—is a testament to our customer-centric ethos. Other elements like our commitment to employee ownership, a no-layoff policy, and patented products contribute to our overall distinctiveness. 

You’ve taken a step further by pursuing Certified B Corporation status. How does this align with your company’s values? And what motivated you to become a Certified B Corporation? 

The pursuit of B Corp certification aligns seamlessly with our commitment to employee ownership and sustainability. NewAge has been green before it became a trend, and the certification validates our policies. It communicates to customers, vendors, and employees that we aren’t just claiming to be a responsible organization, we’re audited for it. The rigorous B Corp audit, with only around 3,500 organizations worldwide, reinforces our dedication. 

Why should people consider a career in manufacturing? 

Manufacturing is inherently creative and diversified. It’s about making things that impact our daily lives. From metals to plastics, ceramics to rubber, manufacturing spans a broad spectrum. Without it, we’d regress. Manufacturing is at the forefront of emerging technology, from 3D printing to automation. It doesn’t get any cooler than 3D printing—seeing a metal part made out of dust. But it’s not just cool; it’s essential for progress. 

Any final words of wisdom for fellow manufacturing leaders? 

Yes. Treat your employees with dignity and respect—it pays dividends in the short and long term. We otherwise diminish our capability as leaders. 

Ken’s vision for NewAge reflects not only a commitment to excellence in the fluid transfer industry but also a dedication to employee ownership, sustainability, and quality-centric manufacturing. We are energized by our shared vision for manufacturing success and look forward to his strategic insights as a DVIRC board member. Ken’s knowledge and experience serve as a valuable guide for the future of manufacturing, starting here in Philadelphia. 

In the dynamic world of manufacturing, the need for adaptation and growth is paramount. Ram-Z, a leading job shop in Corvallis, OR, specializing in machining, fabrication, and welding services, faced the challenge of declining sales in 2023. However, through a strategic partnership with DVIRC, they found a powerful solution to reignite their success. DVIRC’s Lead Generation team takes a hands-on approach to understanding client strengths and opportunities, identifying and vetting relevant prospects, and managing both the active outreach and the communication of leads to their sales team.

Chris Doig, Shop Manager at Ram-Z, expressed the motivation behind this collaboration, stating, “We experienced a decline in sales in 2023, like many in our industry. We did not at the time have a sales department at all, so it was just a couple of us trying to fill that position, and we realized that wasn’t enough.”

Communication is key in any partnership, and Ram-Z found that DVIRC’s team had a solid understanding of the intricacies of machining and fabrication. In a Q&A with Chris, he highlighted the effectiveness of DVIRC’s approach, noting that “It’s hard to sell if you don’t understand what the heck people are selling, but their familiarity with our industry’s lingo and basics made the collaboration effective.”

Chris expressed his happiness with the positive attitudes of the DVIRC team, emphasizing the importance of relational work over transactional interactions. He noted, “What made me happiest was the honestly positive attitudes of everybody that we were working with. Jameson, Jeanette, and Yvonne are really positive people, and I think that we meshed really well with them because we’re also trying to be very positive here, and they seem like they were both good at relational work.”

Ram-Z witnessed immediate results from DVIRC’s lead generation services, securing new jobs and prompting the hiring of a full-time sales manager. Chris Doig shared, “We have received a couple of jobs out of it, and we did hire a sales manager. That’s the only reason we stopped the project because the opportunity arose for us to hire a full-time salesperson.” He anticipates continued success from the contacts provided by DVIRC, with the potential for more purchase orders in the future.

Ram-Z’s success story with DVIRC and OMEP is a testament to the power of strategic partnerships and effective lead generation. As they continue to thrive and adapt in the manufacturing landscape, their journey serves as inspiration for others seeking growth and success in an ever-evolving industry.

Interested in DVIRC’s Lead Generation services? Click here to learn more or Contact Us to start your Business Growth journey today!

DVIRC is proud to sponsor Father Judge’s Wreaths Across America at Washington Crossing National Cemetery, honoring heroes with a wreath-laying ceremony. Join the more than two million volunteers and supporters across the U.S. who will gather to Remember, Honor and Teach at more than 4,000 participating locations in all 50 states, at sea and abroad.

On December 16, 2023 at 11:45 am (Wreath Placement 8:00 AM), Father Judge High School Baseball Team will be helping Washington Crossing National Cemetery to Remember and Honor our veterans by laying Remembrance wreaths on the graves of our country’s fallen heroes. This is a wonderful way to honor the many who have proudly served our country.

Please help us honor as many fallen heroes as possible by sponsoring Remembrance wreaths, volunteering on Wreaths Day, or inviting your family and friends to attend with you.

Learn More →

Created by the Manufacturers Resource Center (MRC) in Allentown, PA in 2013, the What’s So Cool About Manufacturing® contests draw entries from teams across Pennsylvania. The teams of students and teacher coaches receive camera equipment, software, and professional guidance as they learn to script, record, and edit their video stories. The contest’s objective is to change students’ perceptions about manufacturing careers.

These annual video contests excite students across Pennsylvania to explore cool manufacturing careers and produce profiles of companies. Each contest features an online vote for its Viewers Choice Award. The contest format also has been adopted in more than a dozen additional states. Click here to check out the best video submissions from Pennsylvania in 2023.

If you’re interested in getting involved in WSCM as a school or a manufacturer, contact Team Ambassador to present at your High School this Spring, please contact our Director of Workforce Engagement, Hannah McGarry, at hmcgarry@dvirc.org.

In “Can Employee Ownership Save Capitalism?”, Corey Rosen and John Case, the authors of Ownership: Reinventing Companies, Capitalism, and Who Owns What, discuss the varied benefits of employee ownership for workers, owners, and communities alike. The article is an interesting read for anyone who wants to learn more about how employee ownership fits into our greater economic system. To read the full article and interview, click the link below.

Forbes Article

This is a guest article from PNC

The exclusion amounts currently available for the federal gift and estate tax and generation-skipping transfer tax, sometimes individually or collectively referred to as transfer tax(es),1 may prove to be a once-in-a-lifetime opportunity to pass significant wealth to children, grandchildren, and more distant generations in a tax-efficient manner. Individuals and families wishing to capitalize on this tax-saving opportunity may have to act fast since the currently expanded exclusion amount is set to expire at the end of 2025. Moreover, the exclusion amount may change even earlier if Congress enacts legislation reducing the exclusion amount before then.

As discussed below, we recommend that individuals and families for whom intra-family gifting is part of their wealth planning strategy:

• consider making meaningful transfers of wealth now, before the exclusion amount changes;
• confirm that other planning objectives are met before undertaking further gifting; and
• where appropriate, incorporate flexibility into wealth transfer plans to address possible changes in legislation or changes to personal and financial circumstances.

We suggest that you discuss these recommendations with your legal and tax advisors.

The Current Opportunity

The Tax Cuts and Jobs Act of 2017 (TCJA)2 created a significant opportunity to tax-efficiently transfer wealth to the next generation and beyond, effectively doubling the gift and estate tax exclusion and the generation-skipping transfer tax exclusion from the limits in effect in 2017. The exclusion amount is indexed for inflation and for 2023 is $12.92 million per person ($25.84 million for a married couple) and is subject to further adjustment for inflation through 2025. For individuals and families willing and able to make significant gifts, this represents an unprecedented opportunity to transfer assets to younger generations at a much-reduced transfer tax cost.

This increased gifting capacity is not permanent. Assuming no changes, the current exclusion amount (as further adjusted for inflation) is set to expire on December 31, 2025. Beginning January 1, 2026, the exclusion amount will be decreased to $5 million, indexed for inflation. Although the exclusion amount in 2026 had been projected to be approximately $6.4 million, increased inflation may render that estimate obsolete. If today’s elevated inflation rates continue for the next three years, it is possible that the exclusion amount in 2026 could be approximately $8 million per person.3

To Gift or Not to Gift?

For individuals and families who wish to pass assets to children, grandchildren, and (perhaps) more distant descendants as part of their overall wealth transfer plan, gifting now, rather than later, could provide significant benefits to the family. Yet lifetime gifting is a balancing act, where the benefits of making gifts today should outweigh the potential disadvantages. Determining whether to make substantial gifts to future generations is a complex decision and is dependent on a number of factors.

For many, thoughtful planning can capture many of the advantages of lifetime gifting while minimizing the impact of potential disadvantages, such as the few pros and cons of gifting that are highlighted in the graphic above. A discussion with your tax, legal, and financial advisors can help you decide what is right for you and your family.

Considerations in Light of Impending

Exclusion Reduction Assuming the benefits of gifting now outweigh the potential drawbacks, and an individual or family is in a position to make significant gifts, the taxpayer should keep the following in mind when determining how much (and how) to gift before this window of opportunity closes.

Go Big, or Don’t Bother

Having decided to take advantage of the expanded exclusion amount, determine whether the value of the gifts is substantial enough to make best use of this unique opportunity. Because prior use of the exclusion amount reduces a taxpayer’s exclusion amount available to offset future gifts, gifting less than the anticipated reduced exclusion amount does not maximize the current gifting opportunity (Table 1).

It is important to note that if the exclusion amount is reduced in the future, making gifts now will not increase the donor’s future taxable estate. This is because the Internal Revenue Service issued regulations in 2019 (known as the “anti-clawback” regulations) that eliminate the risk of an increased taxable estate solely from a decrease in the exclusion amount.6

Keep All Planning Goals in Mind

While gifting now can create transfer tax savings for a taxpayer’s family, take care that these benefits don’t come at the expense of meeting other financial goals, both now and in the future. For example, making large gifts to family members now may impair the donor’s ability to maintain a desired lifestyle or contribute to charity. Likewise, confirm that recipient children and future generations are prepared to handle financial assets before making large gifts. Using trusts to make significant gifts can help prevent recipients from getting too much, too fast. Trusts can also be designed to provide asset protection that may not be available for outright gifts. Additionally, trusts can serve as a teaching tool to help prepare current and future beneficiaries to successfully manage wealth.

Maintain Flexibility

Because the rules can change at any time, maintaining flexibility with regard to gifting is important. Married couples who wish to preserve as much future gifting capacity as possible may want to consider not electing to split gifts7 and to use the gifting capacity of just one spouse. While this would preclude the donor from making additional gifts in excess of the donor’s remaining exclusion amount (if any) without actually paying a gift tax, the total gifting capacity for the couple would be increased because the exclusion amount for the nondonor spouse is preserved for future use (Table 2).

Another option that may provide flexibility is the use of trusts that can benefit the donor’s spouse (as opposed to a trust that only benefits the donor’s lineal descendants), sometimes referred to as a spousal lifetime access trust.8 This giving strategy may provide some access to the gifted funds to the spouse (and through the spouse, the donor and the family) should the need arise. Unfortunately, this strategy and the one discussed above are only available to married couples. There are few strategies that provide significant flexibility for unmarried individuals when making large current gifts.9

What to Gift

In addition to deciding how much to gift and when, determining the optimal assets to gift can increase the tax benefit to the family. Transferring the following
types of assets may provide some further advantages when it comes to gifting.

Assets Expected to Appreciate in the Near Term

One of the benefits of gifting during one’s lifetime is the ability to remove future appreciation from the
taxpayer’s taxable estate at death. Gifting assets that are expected to appreciate in the near term may provide an advantage over assets that are expected to
appreciate more slowly.

Assets Subject to Valuation Discounts

Gifting assets that are subject to valuation discounts for lack of marketability or lack of control can help magnify the total value that can be transferred without additional transfer tax. For example, if an asset that would otherwise be valued at $10 million is subject to a valuation discount of 20%, this asset would be valued at $8 million for gift tax purposes. To put it another way, transferring assets subject to a 20% valuation discount can allow a taxpayer to transfer assets worth $12.5 million at a gift tax value of $10 million.10

Family Business Interests

The specter of gift taxes can be a significant deterrent to transferring a business to the next generation. Likewise, selling the business to the next generation may require earmarking future business cash flows to pay the sales price, potentially hampering the ability to preserve and grow the business. If a family transition is desired and the business is to continue, it may make sense to consider gifting some or all of the ownership interests in the family business. This transfer may also be eligible for valuation discounts. This can help to leverage the value of assets transferred to the next generation while preserving capital within the business.

Act Before the Window of Opportunity Closes

Gifting requires careful consideration and is not something to undertake lightly, but the benefits of lifetime gifting can be great. If lifetime gifting fits into your wealth transfer plan, consider taking advantage of the current expanded gift and estate tax and generation-skipping transfer tax exclusion amounts before they expire or are otherwise reduced. Contact your financial, legal, and tax advisors to see which gifting strategies can best help you reach your financial goals.

Endnotes

1 For a discussion of gift and estate taxes and the generation-skipping transfer tax, see Subtitle A, Part VI: Increase in Estate and Gift Tax Exemption, Joint Committee on Taxation, General Explanation of Public Law 115-97, December 20, 2018, https://www.jct.gov/publications.
html?func=startdown&id=5152 (last accessed October 31, 2022).

2 Pub. L. 115-97.

3 After expiration of these provisions of the TCJA, the gift and estate tax and the generation-skipping transfer tax exclusion amounts revert to $5 million per person, indexed for inflation beginning from 2010. Internal Revenue Code (IRC) § 2010(c)(3)(B)(ii). The 2026 exclusion amount used herein is an estimate, based on future inflation assumptions.

4 Only growth in the value of the transferred asset(s) occurring after the gift escapes transfer tax, since the value as of the date of the gift will be added back to a decedent’s future taxable estate, pursuant to IRC §2001(b)(1)(B).

5 26 USC § 1014. See also “Income Tax Basis in Property Received,” in Subtitle A, Part VI: Increase in Estate and Gift Tax Exemption, Joint Committee on Taxation, “General Explanation of Public Law 115-97,” December 20, 2018, https://www.jct.gov/publications. html?func=startdown&id=5152 (last accessed October 31, 2022).

6 Treas. Reg. §20.2010-1(c), promulgated pursuant to the authority granted in IRC § 2001(g)(2). On April 27, 2022, The U.S. Department of the Treasury issued proposed regulations containing exceptions to this rule. The rule would not apply to certain transfers included in the donor’s gross estate, transfers made by enforceable promise, and other amounts that are duplicated in the tax base. Also excepted would be items that would have been included in the donor’s gross estate but for the transfer, relinquishment or elimination of a power or interest within 18 months of death. Prop. Treas. Reg. § 20.2010-1(c)(3), 87 FR 24918 (April 27, 2022).

7 See, IRC § 2513.

8 At its most basic description, the SLAT strategy is a gift from one spouse (the donor spouse) to an irrevocable trust for the benefit of the other spouse (the beneficiary spouse) and, perhaps, others. The beneficiary spouse can receive distributions from the SLAT, yet the SLAT is designed to be excluded from the beneficiary spouse’s gross estate and to not be subject to estate tax when the beneficiary spouse dies. The donor spouse can also allocate the exemption amount from the generation-skipping transfer tax to the SLAT, making the value of the gifted assets and any subsequent appreciation in their value exempt from future estate tax for many generations. Of course, each family and each family’s plan is different. Trusts can be complicated, and should not be entered into without obtaining advice. Creating any type of trust involves legal, tax and financial considerations. You should consult your legal, tax and other advisors to determine if creating a SLAT is right for your family and how creating a SLAT would impact your goals and plans.

9 Taxpayers who are not married may have a more difficult time transferring assets while retaining some indirect access to them. Those taxpayers could consider creating self-settled, asset protection trusts in states that allow for their creation, such as Delaware or Ohio. E.g., 12 Del. C. §§ 3570, et seq.; Ohio Rev. Code §§ 5816.01, et seq. Such trusts allow the creator of the trust to be a discretionary beneficiary of the trust while not subjecting trust assets to the claims of the beneficiary’s creditors or causing the value of the trust to be included in the creator’s gross estate and subject to estate tax when the creator dies. These trusts are not without controversy and care should be taken when creating and maintaining them. Additionally, other states may not respect the purported creditor protection aspects of the trust. See, generally, In re Huber, 493 B.R. 798 (Bankr. W.D. Wash. 2013), further proceedings, Waldron v. Huber (In re Huber), 2013 Bankr. LEXIS 4981 (Bankr. W.D. Wash. 2013), aff’d, 2014 U.S. Dist. LEXIS 94574 (W.D. Wash. 2014).

10 The amount of valuation discounts, if any, should be determined by an appraisal performed by a qualified appraiser. Cf., Treas. Reg. § 301.6501(c)-1(f).