In 2020, each person can give away $11.58 million during life. Whatever portion they haven’t used during life, they can use it at death. However, that generous exclusion will be cut in half at the end of 2025. Beginning in 2026, the exclusion will be only $5 million adjusted for inflation from the 2011 base year. If you use the exclusion before it falls back, you won’t be penalized by a “clawback” upon your death in 2026 or later. For example, let’s say Mary has $11.58 million and gives it … [Read more...] about Use the Exclusion or Lose It
Exclusion
Proposed Regulations Address “Clawback” Issue
Each person has a permanent exclusion amount of $5 million which they can give during life or at death. That amount is inflation adjusted. The Tax Cuts and Jobs Act doubled that exclusion for years 2018 through 2025. In 2018, the inflation adjusted, temporarily doubled, exclusion is $11.18 million. Shortly after passage, questions arose regarding hypothetical taxpayers who utilized the doubled exclusion during their lifetime and then died in 2026 or later, when the exclusion reverts to the … [Read more...] about Proposed Regulations Address “Clawback” Issue
Treasury Releases New Inflation Adjustment
Estate planning attorneys and others in the wealth management community have known since mid-December that the amount clients can pass without taxation is now, temporarily, doubled. The new tax law doubled the exclusion until the end of 2025. On January 1, 2026, the exclusion reverts to $5 million (adjusted for inflation from 2011). Each year we get inflation adjustment figures from the Department of the Treasury in the form of a Revenue Procedure. The exclusion amount for 2018 was set to be … [Read more...] about Treasury Releases New Inflation Adjustment
New Year’s Greetings
There are many changes for 2018. Congress passed a last-minute tax law, which the President signed the last business day before the Holidays. Congress Passes New Tax Law Last week the Senate passed the new tax law, (which had been called the “Tax Cuts and Jobs Act” and due to Senate parliamentarian objections is now 'An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018”) and then the House of Representatives passed … [Read more...] about New Year’s Greetings
Discounts: A Complex Matter
Estate planning attorneys often strive to obtain valuation discounts. We set up Family Limited Partnerships and carefully supervise their administration, at least in a perfect world. We advise clients to fractionalize their real estate to obtain a fractional interest discount. But, discounts may not make sense for many clients. Remember, discounts must be taken consistently. In other words, if you are taking a discount for estate tax purposes, the same discounts will apply for income tax … [Read more...] about Discounts: A Complex Matter
Heckerling Leaves Open Questions
It has often been said that the path to knowledge begins with knowing what you don’t know. As usual, this year’s Heckerling Institute helps put the estate planning attorney on the path to knowledge by highlighting how much we do not know. Section 2001(b)(1) calculates the estate tax in the year of death as the sum of the tax on the taxable estate and the tax on the amount of adjusted taxable gifts over the aggregate amount that would have been paid on the gifts if they had been taxed as part of … [Read more...] about Heckerling Leaves Open Questions
