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Based on recent election results, attention has focused on what is in store for the federal transfer tax system. This article discusses the status of the current transfer tax laws and President Biden’s proposals for changes. We recommend contacting your Private Client Lawyer to talk about implementing any wealth transfer strategies.
Estate, Gift, and Generation-Skipping Transfer Taxes
Three federal taxes affect the transfer of wealth: gift tax, estate tax and generation-skipping transfer (GST) tax. Not all transfers are subject to transfer tax. The gift tax (which applies to lifetime transfers) and estate tax (which applies to transfers at death) are “unified,” meaning that a single rate schedule applies to both taxes and there is a single “exemption” amount that each individual may transfer during life or at death without paying gift or estate taxes. The GST tax is an additional tax imposed on certain transfer
Monday, February 22, 2021
Based on recent election results, attention has focused on what is in store for the federal transfer tax system. This article discusses the status of the current transfer tax laws and President Biden’s proposals for changes.
Estate, Gift, and Generation-Skipping Transfer Taxes
Three federal taxes affect the transfer of wealth: gift tax, estate tax and generation-skipping transfer (GST) tax. Not all transfers are subject to transfer tax. The gift tax (which applies to lifetime transfers) and estate tax (which applies to transfers at death) are “unified,” meaning that a single rate schedule applies to both taxes and there is a single “exemption” amount that each individual may transfer during life or at death without paying gift or estate taxes. The GST tax is an additional tax imposed on certain transfers made to persons more than one generation below the donor. The GST tax applies to transfers during life and to transfers at and afte
Recently widowed individuals whose deceased spouse’s estate did not make a portability election by the due date for filing an estate tax return because the estate either was not aware a portability election was available or required, or determined that a portability election was not necessary under their facts – may, with the likelihood that the estate tax exemption will be reduced in the near term, suddenly find themselves needing their deceased spouse’s unused exemption. There may be a window for some to file a late, but still timely, estate tax return to make the portability election.
Portability, enacted as part of the American Taxpayer Relief Act in 2013, allows a surviving spouse to use a deceased spouse’s unused exemption. In order to have use of a deceased spouse’s unused exemption, an estate tax return making a portability election must be filed for the deceased spouse. The due date for filing an estate tax return is nine months after the date of death, with an
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