Posts tagged Estate Tax Exemption
IRS Grants Temporary Relief on Portability Election

This week the IRS released Revenue Procedure 2014-018 that temporarily allows an executor of an estate to make a late portability election. Starting with deaths that occurred in 2011, a surviving spouse is allowed to “port over” the unused portion of the estate tax exemption of the deceased spouse. This has become known as Portability. To avail himself or herself of the benefits of Portability, the surviving spouse is required to timely file an estate tax return (Form 706) within nine (9) months of the date of death.

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Repeal of the Death Tax?

Earlier this week I was listening to a story on Utah Public Radio about the bipartisan Death Tax Repeal Act of 2013 that was introduced into both the House and Senate in June to repeal the federal estate tax, which is sometimes referred to as the death tax. This legislation comes in follow-up to the American Taxpayer Relief Act of 2012 that made permanent the individual estate tax exemption at $5 million (indexed for inflation, it is currently $5.25M per person). At the same time, President Obama’s 2014 Budget proposes reducing the individual exemption to $3.5 million.

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Values Based Planning

In estate planning, we often speak of values based planning. For me this phrase really brings to mind two distinct ideas. The first is using your estate planning as a platform to share your values in writing with your loved ones. This can be done in several ways, including the preparation of a value statement. A value statement is a written statement included in or with your planning, where you share life lessons, beliefs or philosophies. It is one last teaching moment. I believe such a statement can inspire your children and grandchildren and become a treasured family heirloom.

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No Substitute for Communication

As I am preparing for a presentation on succession planning for farms and ranches, I am reminded again about the importance of communication. Whether it is planning an estate for a family or planning for the succession of the business, there truly is no substitute for good communication. I find that even if a child disagrees with how Mom and Dad have set up their estate plan, that child is much more likely to accept the plan if it has been communicated to them by Mom and Dad, while they are still of sound mind. This results in greater family harmony and a decrease in the likelihood of litigation.

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The American Taxpayer Relief Act

Lake Superior State University recently released its “2013 List of Banished Words” and the phrase receiving the most votes was “fiscal cliff.” I would probably join most of you in agreeing that if anyone else “doubles down” on the folks in Washington D.C. “kicking the can down the road” on the “fiscal cliff” again I might just scream.

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2012 Year End Planning – Don’t Let Your Carriage Turn Into A Pumpkin

We all remember from the story of Cinderella how she was given a great opportunity to attend the Prince’s ball, but that the magic would wear off at midnight. With just over two months left in 2012, this year appears to be the estate planning equivalent of the Cinderella story. Under current law, before the clock strikes midnight on December 31, every American can transfer up to $5.12 million free of federal gift, estate and generation-skipping transfer tax. If Congress does not act by the end of this year, the exemption in 2013 will be just $1 million. This exemption, when coupled with historic low interest rates and valuation discounts, mean families can transfer significant assets at little or no tax.

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State Estate Tax

Last year Ohio abolished its estate tax, joining the 28 other states that do not impose such a tax at death. Indiana's legislature recently passed by big margins a bill to phase out its death tax by 2021, and Governor Mitch Daniels signed it this week. Heated debates are going on in Tennessee and Nebraska over the issue. Even in Oregon taxpayer groups are attempting to put an initiative on the November ballot to abolish the death tax, and polls show it could win.

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New Estate Tax Proposal

Jim McDermott (D-WA), a member of the House Ways and Means Committee, introduced HR 3467 the “Sensible Estate Tax Act of 2011”. According to a press release by Congressman McDermott: “This legislation will take us back to an estate tax that worked during one of America’s most prolonged periods of economic prosperity. It provides the kind of certainty that practitioners and taxpayers have been calling for since the Bush tax cuts took effect. Never in our history has an exemption increased over 500% in less than a decade and known loopholes been left open for abuse. The estate tax is broken, and it’s time we fix it.”

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