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Monthly Archives: December 2017

Dec 31, 2017 - Estate Planning

The 2017 “Tax Cuts Act” and its Impact on the Federal Estate and Gift Tax Law

Pending legislation could have a major impact on the Federal Estate and Gift Tax. H.R. 1, the “Tax Cuts and Jobs Act” (“Tax Cuts Act”) released on November 2, 2017 by the Ways and Means Committee of the U.S. House of Representatives, would double the basic exclusion amount for gift and estate taxes from $5 million to $10 million per person, indexed for inflation. It appears that, if the Tax Cut Act is enacted, in 2018 a single person could shield up to $11.2 million, and a married could shield up to $22.4 million, due to inflation adjustments. The Tax Cuts Act would repeal the estate tax and the generation skipping tax in six years, as of Jan. 1, 2024, while still maintaining a full stepped-up basis for inherited property. (The retention of the step-up in basis had been in doubt.) The Tax Cuts Act keeps the Federal Gift Tax intact (still “unified” with the Federal Estate Tax), with a $10 million basic exclusion amount for gifts (adjusted for inflation). However, it provides a break in 2023: a new lower top rate of 35%, down from 40%. There is substantial opposition to the Federal Estate Tax repeal. “This is a tax plan that fails to address fiscal soundness and morality,” stated Gene Sperling, former director of the White House Economic Council under Presidents Bill Clinton and Barack Obama, on a Center for American Progress conference call discussing the bill. The Center considers the federal estate tax repeal to be both […]

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Dec 29, 2017 - Articles

Tax Provisions Impacting Estate Planning In the New Tax Act

The new Tax Cuts and Jobs Act of 2017 (“2017 Tax Cuts Act”) signed by the President on December 22, 2017, P.L. 115-97 (115th Cong., 1st Sess.), contains important tax provisions related to estate planning. The most important such provision is the doubling of the Applicable Exclusion Amount for Federal Estate and Gift Taxes, described in Paragraph 1 below. 1. Doubling the Applicable Exclusion Amount for Federal Estate and Gift Taxes. The new law doubles of the estate and gift tax “Applicable Exclusion Amount,” from $5 million to $10 million, for gifts made, and estates of decedents dying, after December 31, 2017, and before January 1, 2026. (These amounts were previously adjusted for inflation.) This means that by employing appropriate estate planning measures, a married couple’s total exemption may be increased from $10 million to $20 million. By increasing the applicable exclusion amount, the new law automatically increases the Generation Skipping Tax (“GST”) exemption. Code Sec. 2631(c). By way of Background: a. A federal “gift tax” is imposed on certain lifetime transfers (Code Sec. 2511), and a federal “estate tax” is imposed on certain transfers at death. (Code Sec. 2001) b. Under pre-2017 Tax Cuts Act law, the first $5 million (as adjusted for inflation in years after 2011) of transferred property was exempt from estate and gift tax. For estates of decedents dying and gifts made in 2018, this “basic exclusion amount” was $5.6 million ($11.2 million for a married couple). c. For estates of decedents dying and gifts […]

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