30 December
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The Mad Dash is Over – For Now
The mad dash to take advantage of the $11.7 million gift and estate tax exemption before the end of 2021 is now over. So what should be our strategy from here?...
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The mad dash to take advantage of the $11.7 million gift and estate tax exemption before the end of 2021 is now over. So what should be our strategy from here?...
Continue reading[vc_row triangle_shape="no"][vc_column][vc_column_text]Back in the heyday of estate planning when just about everyone who died owning a home and an IRA would have an estate subject to this tax, the choice between paying estate tax versus paying capital gain tax was an easy one to make. Up until the last few years, the highest estate tax bracket was 55% and the top long-term capital gain tax bracket was only 15%. If you had a choice of paying the estate tax or paying the capital gain tax, the capital gain tax was the obvious choice. This choice was really so clear-cut that most of...
Continue readingThe English poet, John Donne, many years ago wrote, “Send not to know for whom the bell tolls. It tolls for thee.” Donne eloquently made the case that a loss to anyone is a loss to all. Similarly, although you may not see an immediate increase in your taxes as a result of the so-called “American Taxpayer Relief Act,” the overall economic impact of the tax increases under the Act will, in some ways, impact us all. Following is a smattering of some of the changes in the tax law arising from the new tax law: The top income tax rate...
Continue readingBefore 2010, married couples could pass on up to two times the federal estate tax exemption by including "A-B Trusts" or "A-B-C Trusts" in their estate plan. Because TRA 2010 was a temporary law, many wondered if portability was a concept that would only work for those dying in 2011 and 2012. We can stop wondering. The “American Taxpayer Relief Act of 2012” (ATRA) is now "permanent" law. Under ATRA, portability is a constant principal going forward. Now married couples may use “portability” to add any unused portion of the estate tax exemption of the first spouse to die to the...
Continue readingA Qualifying Domestic Trust, or QDOT, allows taxpayers who are not U.S. citizens to claim the marital deduction for estate tax purposes, while keeping the property in trust for other future contingent beneficiaries. A non-citizen spouse is not otherwise eligible for the marital deduction. QDOTs can be used when trust assets would likely be subject to the federal estate tax (married couple with taxable estate greater than $5 million), without the marital deduction otherwise being available. Otherwise, without a QDOT, the surviving spouse must become a U.S. citizen before her deceased spouse’s estate tax return is filed. QDOT Requirements. The following...
Continue readingDear 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...
Continue reading[vc_row triangle_shape="no"][vc_column][vc_column_text]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...
Continue readingYesterday 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...
Continue reading1797. 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...
Continue readingGood 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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