Budget Proposals from Obama Administration-A BIG Step Backward

The probability of these provisions becoming the law of the land is uncertain, at this point, and perhaps unlikely.  “Permanent” in estate tax  lingo is, apparently, a transitory term.  Since the new law does not have a built in expiration, we have called it permanent, and the structure of the transfer tax regime appears settled-but see below!

These provisions are significant:

  • A return to the estate tax exemptions of 2009 ($3.5 million at death, with a limit of $1 million during life)
  • Exemptions would NOT be indexed for inflation
  • Estate and Gift Tax rates going from 40% to 45%
  • Limit on the GST Exemption to 90 years
  • Limit on GRAT terms to no less than ten years
  • Limits on retirement plans to $3 million
  • Mandated 5 year distribution for non spousal retirement plan beneficiaries
Posted in Status of Tax Legislation, WillPlan Blog.

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