Estate Tax Reform Update

There are three ways the transfer of wealth is currently taxed: estate taxes, gift taxes, and the generation-skipping transfer tax.  The tax reform packages recently passed by the House and Senate include some changes to these areas of the tax code.  As I have written previously, the estate tax was effectively repealed for a large segment of the population in 2010.  However, for those who continue to have estates subject to the tax, it can be onerous.  So what do we know and what is still to be determined?  Both the House and Senate bills double the current estate, gift, and generation-skipping transfer tax exemption to approximately $11 million.  However, the House bill phases out the taxes altogether over six years.Stay tuned for what happens.  Depending on how things go, it may require changes for many estate plans.  At this point, we are not recommending any gifting in excess of the annual exclusion gifting, pending the outcome of reconciliation.