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31 January
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Don’t Forget about Annual Exclusion Gifting

Posted by David M. Grant
in Estate Tax Planning

As published yesterday in LISI Estate Planning Newsletter #2056 (January 30, 2013).* With all eyes focused on a potential “fiscal cliff” in the last quarter of 2012, some might have missed the IRS’ October 18, 2012 announcement of an increase in the gift amount allowable under the annual exclusion.  See Rev. Proc. 2012-41.  In 2013 a person will be able to give $14,000 to each donee, free of gift tax.  While as of late planners have largely been concerned with helping clients make larger gifts under the unified credit, this announcement reminds us of our old friend—the annual exclusion.  This article...

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22 January
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Real Taxpayer Relief through Judicious Use of Trusts

Posted by Mark L. Dodds
in Trust Administration

With the recent enactment of the so-called “American Taxpayer Relief Act” (the only true relief being that we are at least relieved of having to listen to the talking heads every day discussing the “fiscal cliff”) tax rates have been increased on those with the highest incomes. (Note, I did not write that taxes were increased on the “wealthy” because the proponents of higher taxes, such as the magnificent duo of Warren Buffet and Bill Gates, will hardly be affected by the increases because i) they have very little income in relation to their wealth, so their income taxes are...

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17 January
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Cayman Islands to open up to increased scrutiny

Posted by David M. Grant
in Asset Protection

It was reported earlier today that the Cayman Islands, a British overseas territory, has outlined plans to create for the first time a public database of funds domiciled in the Islands.  As proposed, the public database would also include a listing of fund directors.  It appears that directors might even be subject to a vetting process to ensure they are qualified to act as fiduciaries for investors.  Interestingly enough, it is being reported that most of the push to change has come from hedge fund investors, rather than politicians.  Click here for more details on the recent Cayman proposals. The Cayman Islands has...

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16 January
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$5,250,000: the 2013 inflation adjusted gift/estate/GST exemption

Posted by David M. Grant
in Estate Tax Planning

The IRS announced yesterday in Rev. Proc. 2013-15 (see page 11, item 13), that the 2013 inflation-adjusted exemption equivalent of the unified credit is $5,250,000.  In other words, for an estate of any decedent dying during calendar year 2013, the basic exclusion amount is $5,250,000 for determining the amount of the unified credit against estate tax under Internal Revenue Code §2010.  This amount is up $130,000 from 2012 when the total exemption equivalent was $5,120,000....

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04 January
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We went over the “fiscal cliff”—if only for a few hours—now what?

Posted by David M. Grant
in Estate Tax Planning

Technically speaking, we actually went "over the fiscal cliff," as many significant tax increases and spending cuts automatically took effect at the stroke of midnight on December 31, 2012.  Later that day, however, on January 1, 2013, retroactive legislation (going back at least several hours) passed the Senate, and then later the House.  Our new law, the American Taxpayer Relief Act of 2012 (ATRA), permanently extends important tax provisions and temporarily extends others.  Following is a very brief overview of ATRA: Transfer (Estate, Gift & GST) Taxes:  Now for the big surprise—ATRA makes permanent the $5 million exemption amounts for the estate,...

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15 December
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RE: An Open Letter to My Parents—2013 Annual Exclusion Goes Up to $14,000

Posted by David M. Grant
in Estate Tax Planning

Dear Mom and Dad, Good news, for the first time since 2009 the IRS has raised the gift amount allowable under the annual exclusion.  In 2013 a person will be able to give $14,000 to any and each donee, free of gift tax (see Rev. Proc. 2012-41). As an example, in 2013 I will be able to give each of my five children $14,000, or $70,000 total.  Because my wife will also be permitted to make use of her own annual exclusion amount, together we can give up to $140,000 to our children next year, free of gift tax, under our combined...

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13 December
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Bill Gates, Sr., Billionaire Warren Buffett, and Others Call for $2 Million Exemption, 45% Estate Tax Rate

Posted by David M. Grant
in Estate Tax Planning

Several dozen wealthy people, including Warren Buffet, Bill Gates, Sr., Jimmy Carter, and George Soros, have signed a statement calling for a "strong tax on the largest estates." The statement was released on Tuesday by a group called "United For a Fair Economy." Bill Gates, Sr. noted, “Those of us who have signed this statement to date – including my friend Warren Buffett – believe that a $4 million exemption per couple and a 45% rate, rising on the very largest fortunes, is perfectly reasonable, and should be put into law. Particularly in the face of the devastating cuts to social programs...

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30 November
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Recommended Estate Tax Laws

Posted by David M. Grant
in Estate Tax Planning

Yesterday I blogged about the history of the estate tax and other transfer tax laws.  While the past is certainly instructive in understanding the future, to prognosticate future law, it’s also helpful to look at those proposals and suggestions which have been offered up to Congress and the White House.  In March we shared President Obama’s estate tax ideas as set forth in his budget proposal.  Today, we share options for tax reform as recommended to Congress on April 4, 2012 by the Joint ABA Sections of Taxation and Real Property, Trusts & Estates Law.  The full document can be...

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29 November
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Brief History of Transfer (Estate, Gift, GST) Tax Laws

Posted by David M. Grant
in Estate Tax Planning

1797.  The first version of the estate tax was levied in the United States in 1797 for the specific and limited purpose of funding the formation of the U.S. Navy. 1862.  The Revenue Act of 1862 enacted an inheritance tax and introduced a gift tax for the first time in order to specifically fund the Civil War effort. 1898.  The War Revenue Act of 1898 implemented a graduated inheritance of between 0.74% and 15% of the amount inherited for the specific purpose of funding the Spanish-American War. 1916.  The Revenue Act of 1916 implemented an estate tax equal to 1% on amounts between...

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07 November
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Estate Planning Attorneys Will Keep Busy After 2012 Election Results

Posted by David M. Grant
in Estate Planning

Good morning America.  President Obama has won another four-year term as President of the United States! So what might that mean for the estate and gift tax laws?  While the President certainly surprised most everyone in December 2010 by temporarily raising the exemption equivalent of the unified credit to $5,000,000 and lowering the transfer tax rates to 35%, those hoping for the estate tax to disappear should probably not look for another similar surprise. The probability is now greater that we’ll have lower exemption amounts (as low as $1,000,000) and higher transfer tax rates (as high as 55%).  Let me be clear,...

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