2017 Estate, Gift and GST Update! What Does This Mean to Your Current Plan?

Inheritance Tax

The current permanent Federal Transfer Tax Landscape by The American Taxpayer Relief Act of 2012:

(1) Reunification of the Estate and Gift Tax Regimes;

(2) $5MM (as increased for inflation) exemptions for estate, gift and generation skipping transfer taxes; and

(3) Portability for the estate tax exemption between spouses at death. (Please note this only applies to the estate tax exemption; the GST exemption is not portable.)

2017 Federal Inflation Exemption Increases per individual:

  • $5,490,000 federal estate tax exemption / federal lifetime gift tax exemption.
  • $5,490,000 federal GST tax exemption (increased from $5,450,000 (so additional $40,000 from 2016).
  • All increased from $5,450,000, so additional $40,000 from 2016.
  • 40% top tax rate for federal estate, gift and GST tax.
  • $14,000 annual gift tax exclusion (no increase for 2016). This is in addition to the lifetime exemption.

What does this mean to you? Increased exemptions offer opportunities to leverage assets through a variety of estate planning techniques and make larger lifetime gifts.  Additionally, there is income tax planning that can be done – shift income producing assets to children or grandchildren who are in lower income tax brackets or reside in states with a low or no state income tax.

State Estate Tax Update: Trying to prevent the exodus of wealthy individuals to more tax favored jurisdictions…estate tax exemptions go up or are eliminated altogether.

New Jersey going from $675,000 of exemption to $2,000,000 in 2017.  New Jersey estate tax will be eliminated altogether in 2018.  There will be no New Jersey estate tax for Jersey residents dying after January 1, 2018.

New York increased its state estate tax exemption to $5,250,000 on April 1, 2017.  However, NY includes a catch.  For estates valued more then 105% of the New York basic exclusion amount, a New York estate tax will be imposed on the entire amount. For example: assume a person dies domiciled in NY on June 10, 2017 with an estate valued at $5,550,000.  The NY basic exclusion amount will be $5,250,000.  The value of the estate exceeds 105% of the then available NY basic exclusion amount ($5,250,000 * 105% = $5,512,500), the estate will be subject to NY estate tax on the ENTIRE $5,550,000. However,if the person had died with an estate valued at $5,249,000, NO NY estate tax would be owed because the basic exclusion amount would apply to the estate.

Florida – no state estate tax! no state income tax! just sunny and awesome!

when it comes to investment property things are sunny in florida

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