In the https://www.treasury.gov/press-center/press-releases/Documents/Tax-Framework.pdf (Sept. 27, 2017), the President and Congressional Republicans provided a framework of their tax reform proposal, which includes repeal of the estate and generation-skipping transfer taxes. The proposal would:
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In the past many financial institutions refused to honor a power of attorney that was more than a couple of years old, or in some cases refused to honor a power of attorney that was recently executed. In response to these concerns, the Connecticut legislature recently enacted Public Act 17 – 91. This act provides that, effective October 1, 2017 a financial institution or healthcare provider must accept a properly executed power of attorney or appointment of health care agent. If the institution or provider refuses to accept the document, the institution or provider is subject to a court order mandating acceptance of the document as well as liability for attorney’s fees and costs incurred in obtaining the court order. Public Act 17 – 91 applies to a power of attorney or appointment of health care agent signed prior to the Act.
Connecticut has adopted a new LLC act that will be effective July 1, 2017. Many of the changes from current law are technical and/or minor. However, there are two changes that have major implications for creditor protection planning in Connecticut. There are also significant changes in the duties that managers and members owe to the LLC and each other.
House and Senate Republicans recently introduced legislation to repeal the federal estate tax. The legislation would repeal the estate tax and the generation skipping tax. The gift tax would be retained, however the top tax rate would be reduced to 35%. The present step up in basis rules would be retained so that if a decedent's assets were sold, the heirs would pay income tax only on post date of death appreciation.
The IRS recently issued regulations that affect the reporting responsibilities of an estate executor or administrator. If an executor is required to file a federal estate tax return, they must also file with the IRS a separate form stating the value of certain items included in the decedent's estate. Each beneficiary who receives property from the decedent must receive information regarding the property he or she receives or could receive. This requirement applies to all estates if the required estate tax return is filed after July 31, 2015.
For many years, wealth preservation entailed aggressively transferring assets out of the estate of high net worth individuals to avoid estate taxes and consequently giving up a "step up" in basis adjustment for income tax purposes. Because the estate tax rates were significantly greater than the income tax rates, avoiding estate taxes was the primary focus of tax based estate planning. The new tax landscape is transformed by increased income tax rates and increased federal estate tax exemptions. It is clear that increasingly the focus of wealth preservation will move away from avoiding estate taxes and be more focused on avoiding income taxes. Much of the wealth preservation analysis will be about measuring the estate tax cost against the income tax savings of allowing the assets to be subject to estate taxes. Asset protection techniques will continue to be an important part of wealth preservation planning.
The IRS has announced that the federal estate tax exemption for decedents who die in 2017 is $5,490,000. The gift tax annual exclusion remains at $14,000 per donee.
A Treasury official reaffirmed recently that changes will be made in final IRS estate tax valuation rules, to address concerns about retroactivity and whether the guidance imposes a right encouraging owners to cash out interests in family-owned business. With the election of Donald Trump, Congress and trade groups have discussed the possibility that the rules will be withdrawn.
The IRS has announced that the Federal estate and gift tax exemption for 2016 will be $5,450,000 and that the gift tax annual exclusion will remain at $14,000 for 2016 gifts
The IRS issued proposed regulations under Code Section 2704 that would severely limit or eliminate the use of valuation discounts for family estate and gift tax planning. The proposed regulations would apply to transfers that occur after the regulations are finalized. The IRS will hold a public hearing on the proposed regulations on December 1, 2016. The regulations will not become final until December 31, 2016, at the earliest.
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AuthorMr. Hendel has been practicing wealth preservation planning for over forty years. Archives
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