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IRS Grants Taxpayers Two-Year Window to File Portability Election

In a long-awaited move, the IRS announced recently that taxpayers will now have at least two years to file an estate tax return to elect portability of a decedent’s unused estate tax exemption to the decedent’s surviving spouse.

The new rule was articulated by the IRS in Revenue Procedure 2017-34 and became effective as of June 9, 2017.  Under this new two year filing window, which the IRS characterizes as a “simplified method for certain taxpayers to obtain an extension of time  . . . to make a ‘portability’ election”, a decedent’s estate will have until the later of January 2, 2018 or the second anniversary of the decedent’s death to file an estate tax return to elect portability.  In order to take advantage of this simplified method for obtaining an extension of

Planning and the Death of the Death Tax

Planning and the Death of the Death Tax

May 1, 2017

Authored by: Andrew Bleyer and Larry Brody

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On Wednesday afternoon the White House again proposed eliminating the so-called death tax as part of its tax reform plan, but the details remain sparse.  When pressed for specifics Director Cohn simply stated that with the implementation of the administration’s tax plan, the death tax would disappear.

The phrase “death tax” entered the popular lexicon by way of tax reformers wanting to summarize and caricature the several parts of the Federal transfer tax system.

To Do: Year-End Gifting. Check (or not)

(This is an updated post from December 2015)

With the end of the year approaching, we thought now would be a good time to re-post and update this blog from the end of 2015.

For 2017, the annual exclusion gift amount will remain the same at $14,000 but the lifetime gift and estate tax exemption will increase to $5,490,000 (up from 2016’s $5,450,000).

With fourteen days left in the year, many people are still planning how to make 2016 gifts, whether by making “annual exclusion” gifts of $14,000 per beneficiary, or by taking advantage of the 2016 gift tax exemption amount of $5,450,000.  Whatever the reason for the last-minute gifting, as the end of the year approaches, people may be tempted to make a “quick and easy” gift to their beneficiaries by simply writing a check. As the year draws to a close, however, if your gift is dependent on utilizing 2016

To Do: Year-End Gifting. Check (or not)

With the end of the year approaching, we thought now would be a good time to re-post and update this blog from the end of 2014.

For 2016, the annual exclusion gift amount will remain the same at $14,000 but the lifetime gift tax exemption will increase to $5,450,000 (up from 2015’s $5,430,000).

With fourteen days left in the year, many people are still planning how to make 2015 gifts, whether by making “annual exclusion” gifts of $14,000 per beneficiary, or by taking advantage of the 2015 gift tax exemption amount of $5,430,000.  Whatever the reason for the last-minute gifting, as the end of the year approaches, people may be tempted to make a “quick and easy” gift to their beneficiaries by simply writing a check. As the year draws to a close, however, if your gift is dependent on utilizing 2015 tax law, beware of the potential trap of making a gift

Mission: Possible–Saving Estate Taxes on Life Insurance

The trailers for the newest installment in the Mission: Impossible franchise, Mission: Impossible Rogue Nation, are being released and, as always when we see actors performing daredevil stunts, it makes us think about life insurance.  Hazard (I use the term loosely, in light of what these guys do) of the job, I guess.  So, once again, we thought we’d remind everyone about the use of life insurance trusts to reduce estate tax by re-posting the blog we wrote in after seeing his stunts for Ghost Protocol.

And, for your viewing pleasure, share another video of Mr. Cruise’s stunts.  (I’m starting to think Tom Cruise or Mission: Impossible should start sponsoring our blog!)

It’s true, it is possible to transfer life insurance proceeds to your beneficiaries without having to pay estate tax on those proceeds.  An insured can create an irrevocable trust that is designed to be the owner and beneficiary

To Do: Year-End Gifting. Check (or not)

With the end of the year approaching, we thought now would be a good time to re-post this blog from the end of 2012.  While the Mayan calendar is no longer in play, nor is the fiscal cliff, the rules of completed gifts still apply.  For 2014, however, increase the annual exclusion gift amount to $14,000 (instead of 2012’s $13,000) and the gift tax exemption amount to $5,340,000 (instead of 2012’s $5,120,000).

With nine days left in the year, many people are still planning how to make 2012 2014 gifts, whether by making “annual exclusion” gifts of $13,000 $14,000 per beneficiary, or by taking advantage of the 2012 2014 gift tax exemption amount of $5,120,000 $5,340,000. Maybe they couldn’t make up their mind before now, maybe they were waiting for the election results, or maybe they wanted to see whether the Mayan calendar was accurate before making any gifts. Whatever the

Administration Proposes Estate and Gift Tax Changes in 2015 Budget

Inside the Administration’s recently released budget proposal are a few notable proposed changes to the estate, gift and GST taxes, including a return to 2009 rates and exclusions, and the elimination of Crummey gifts and perpetual GST trusts. Keep in mind that the budget proposal is merely a wish list and many of these proposals have been on the list for many years without making it into legislation. Here are the proposals for the 2015 budget:

When a Woman Loves a Woman (With Apologies to Percy Sledge…): The Supreme Court Strikes Down DOMA

womanwomanOn June 26, the US Supreme Court decided the case of United States v. Windsor, holding (1) that the Court had jurisdiction to consider the merits of the case, and (2) that Section 3 of the Defense of Marriage Act (“DOMA”) is unconstitutional as a deprivation of the equal liberty of persons that is protected by the Fifth Amendment. For a description of the previous history of the case, see our prior posts here and here. In a 5-4 opinion, Justice Kennedy delivered the opinion of the Court. Justices Ginsburg, Breyer, Sotomayor and Kagan concurred, while Justices Scalia, Roberts, Alito, and Thomas dissented.

Facts:

Edith Windsor (“Windsor”) and Thea Spyer (“Spyer”), New York residents, were legally married in Ontario, Canada, in 2007, after being in a relationship since 1963.

That Underwater Policy Does Not Have Any Value, Right?!

SCUBATaxpayers/insureds are often surprised when they are taxed on the value of an old policy that was underwater, when it was transferred to them, causing them to assume that the policy had no value for the government to tax. Here again, the taxpayers in Schwab v. Commissioner (9th Cir. 2013), were surprised that they had recognized taxable income on the distribution to them of life insurance policies from their non-qualified plan, which had surrender charges that exceed their cash value.

Michael and Kathryn, a married couple, were employees of Angels and Cowboys, Inc., which sponsored a non-qualified multi-employer welfare benefit plan that was administered by a third party. Each of them caused the plan to purchase, with a single premium, a variable universal life insurance policy with a three-year no lapse guarantee.

When a Woman Loves a Woman: The Supreme Court Strikes Down DOMA

US Supreme CourtThis morning, in a landmark ruling for gay rights, the Supreme Court of the United States struck down the Defense of Marriage Act (DOMA), on Fifth Amendment Equal Protection grounds, in the case of U.S. v. Windsor (570 U.S. ______ (2013)). DOMA is the 1996 federal statute preventing federal recognition of same-sex marriages.

Under DOMA, marriage is defined for federal purposes as a union between one man and one woman. Such definition determined who was covered by more than 1,100 federal laws, programs and benefits, including Social Security survivor benefits, immigration rights and family leave, as well as federal tax benefits, including, as was the issue in Windsor, the unlimited federal estate tax marital deduction. Under the law, gay couples who are legally married in a state (or foreign country) that allows

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