Tax

Due to the increased volume of federal estate tax return filings in order to make the “portability election,” the IRS has announced that estate tax closing letters will only be issued upon request by the taxpayer. This change in IRS policy started on June 1, 2015. What is the “Portability Election” and How is the Election Made? The “portability election” refers to the right of a surviving spouse to claim the unused portion of the federal estate tax exemption of their deceased spouse and add it to the balance of their own exemption. The portability election went into effect for [...]

The concept of “portability” is still relatively new in the law of estate planning, having become available only after 2011. Since then, it’s been both a blessing (for its tax saving benefit) and a curse (because of rules that seemed to be constantly shifting). Fortunately, the IRS has recently clarified some important deadlines about portability. How can a portability election benefit you and your family? It could help save hundreds of thousands of dollars of estate and gift taxes for your family if you lost your husband or wife in the last few years. Although the exact mechanics of the [...]

The IRS recently released proposed regulations which effectively end valuation discounts that have been relied upon for over 20 years. If the IRS’s current timetable holds, these regulations may become final as early as January 1, 2017. Although that date isn’t set in stone, I expect that the regulations will be final around that time or shortly thereafter. With New Regulations Looming, What Should You Do Now? As I mentioned before, the timetable isn’t set in stone. Luckily, there’s still a narrow window of time to implement “freezing” techniques under current, more favorable law, to save taxes and protect your [...]

As the federal estate tax exemption has ballooned from $1.5 million ten years ago to $5.43 million today, the need for estate tax planning has drastically decreased.  Instead, higher income tax rates that were ushered in under the American Taxpayer Relief Act of 2012 (ATRA) have shifted the focus of estate planning to a new frontier:  income tax basis planning. The Basics of Income Tax Basis In its simplest form, income tax basis is the cost to buy an asset.  Basis must be tracked because when an asset is sold, income tax liability in the form of capital gains is [...]

Recently the IRS issued the final rules governing the “portability election” as it relates to the federal estate tax exemption.  Married couples need to understand how these final rules may affect their existing estate plans, while recent widows and widowers need to understand how these finals rules may affect their deceased spouse’s estate. What is the “Portability Election” and How is the Election Made? The “portability election” refers to the right of a surviving spouse to claim the unused portion of the federal estate tax exemption of their deceased spouse and add it to the balance of their own exemption.  [...]

Death taxes are back in the news at the federal level as well as in Delaware and Minnesota. What Happened to the Death Tax Repeal Act of 2015? Back in February and March of 2015, identical bills calling for repeal of the federal estate tax and generation-skipping transfer tax were introduced in the U.S. House and Senate.  In April 2015 the U.S. House passed the “Death Tax Repeal Act of 2015” by a margin of 240 to 179.  While the votes were largely along party lines (233 Republicans voted for the bill, while 176 Democrats voted against it), seven Democrats [...]

With the end of the year fast approaching, now is the time to fine tune your estate plan before you get caught up in the chaos of the holiday season.  One area that married couples should revisit is their estate tax planning. Do You Still Have “AB Trust” Planning in Your Estate Plan? If you’re married and you haven’t had your estate plan reviewed since before January 2, 2013, by an experienced estate planning lawyer, then pull your documents out of the drawer, dust them off, and take a closer look at their trust provisions.  Do they contain terms such [...]