Upstream GPOA planning turns an unused exemption into a basis adjustment

Estate planners have a name for a maneuver that uses an older relative's unused federal estate tax exemption to reset the basis of appreciated trust assets: upstream GPOA planning. Writing in WealthManagement.com, Joy Matak and Martin M. Shenkman of Brach Eichler LLC describe how giving the relative a general power of appointment pulls the assets into that person's gross estate and earns what they call a favorable basis adjustment. The 'upstream' part simply marks the direction — the exemption comes from an older generation.

Estate planning has shifted. With the federal exemption now permanent and inflation-indexed at $15 million, wealthy families are less concerned about estate tax than income tax. The technique sits where income, estate and gift rules overlap, and its purpose is to save income tax on embedded capital gains.

For RIAs, that overlap is now the high-value work. Matak and Shenkman add caveats: success depends on genuine substance, careful structural safeguards and enough unused exemption. Getting those conditions right is drafting work, not a software checkbox. The useful filter is a family fact — an older relative with unused exemption and a trust holding appreciated assets. When that combination exists, the basis adjustment can be worth more than a decade of management fees on the same trust.

The article is written for practitioners, but the trigger sits in the client's family tree. Wealth managers who wait for an attorney to raise the idea may miss the moment; the family fact may be visible only through the advisor's relationship. Put the question in the next client review: is the older relative's exemption still unused?