Short Version: Obama’s Proposal to Tax Gains on Gifted and Inherited Property

In the State of the Union Address, the President proposed raising revenues by imposing capital gains on appreciation in the value of a decedent’s assets at his or her death, coupled with an increase in the capital gains tax rate to 28 percent. The proposal would treat bequests and gifts, other than those made to charities, as recognition events on which the capital gains tax would be imposed, but for married couples, no tax would be due until the death of the second spouse. Capital gains of up to $200,000 per couple ($100,000 per individual) could still be left free of tax and this exemption would be automatically portable between spouses. Couples would also have an additional $500,000 exemption for personal residences ($250,000 per individual), […]

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New Bills Introduced to Repeal Estate Taxes

Rep. Mac Thornberry (R-Tex) introduced H.R. 173, 114th Cong., 1st Sess. (Jan. 6, 2015), the “Estate Tax Repeal Act,” and Rep. Richard Hudson (R-N.C.) introduced H.R. 186, 114th Cong., 1st Sess. (Jan. 7, 2015), the “Farmers Against Crippling Taxes Act,” which would repeal the estate, gift, and GST taxes, but not the basis rules of Code Sec. 1014 and Code Sec. 1015 . H.R. 173 has 55 co-sponsors as of this writing. Both bills were referred to the House Committee on Ways and Means. These are meant to stimulate the debate about moving forward, perhaps along lines suggested in our recent posts.  Certainly, the issue is starting to get renewed attention.  It is always possible that we could be surprised, as we were two years […]

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Is the Repeal of the Federal Estate Tax Becoming More Likely?

Keeping in mind my recent post showing continued political interest in legislation to repeal the “death tax”, careful observers are starting to make an argument that would have been implausible before Obama’s recent proposal to impose capital gains taxes on inherited property. The new reasoning starts with the recognition that the estate tax now raises only about $7 Billion (estimated) per year, and affects only .2% of our population after increasing the exempt amount to $5.43 million per person.  Estimates of the cost of collecting the tax, and the loss in revenue from income taxes on (greater, non-taxed) inherited wealth have led to wild eyed estimates that ending the estate tax would result in a net profit to the government.  If we then add the […]

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Obama’s Threat to Step Up in Tax Basis, at Death

President Obama’s proposal to impose capital-gains tax on many inherited assets would curtail a valuable tax benefit known as the “step up” in basis. Here’s how the Journal explained the step-up benefit in a recent Weekend Investor cover story: The federal code has long had a provision, known as the “step up,” that cancels the long-term capital-gains tax on assets that a taxpayer holds until death. The step-up automatically raises the owner’s cost basis for such assets—the starting point for measuring a taxable gain—to its full market value as of the date of death. For example, say an investor bought a piece of land or stock shares many years ago for $20,000, and the value has grown to $200,000. If the investor sells the asset before his death, he will owe capital-gains tax on the […]

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The Classic Modern Analysis of Dying

We best not omit the very influential physician Sherwin Nuland, who wrote How We Die in 1994.  He left us last year.  The wonderful “Brainpickings” explains it better than the Will Doctor ever could. http://www.brainpickings.org/2015/01/02/sherwin-nuland-what-everybody-needs/

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Dealing with the End of Life (Death)

As 75 Million baby boomers start to enter their “declining” years, increasing attention if being paid by us, and our politicians, philosophers, pundits, journalists and physicians.  This will increase dramatically, and eventually alter the way in which we manage our final years.  Being Mortal: Medicine and What Matters in the End by Atul Gawande is a masterwork and points in the direction in which we should be heading. http://www.nybooks.com/articles/archives/2015/jan/08/better-way-out/ The link is to the review of the book by Marcia Angell in a recent NYRB.  Another great resource for the interested reader is the “Death” issue of Laphams Quarterly, reviewing the way our forebears looked at their passing, since the dawn of civilization, and through the greatest of our philosophers and artists.

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Repeal of Estate and Gift Taxes is Attempted Again

Congressman Mac Thornberry filed his first bill of the 114th Congress on its opening day. The Death Tax Repeal Act (H.R. 173)” will completely and permanently repeal the Federal estate, gift, and generation-skipping taxes. The bill already has garnered 36 cosponsors.  Without any reasonable chance of passing either House, the bill is symbolic in nature and likely meant to curry political support at home.

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For Advisors: Actec Detailed Summary of Asset Protection Jurisictions

David Shaftel, Esq, has done a great job of highlighting the differences among the fifteen states that now offer full asset protection laws, along with another ten states that offer limited protection via Inter Vivos QTIP Trusts. http://www.actec.org/public/Documents/Studies/Shaftel-Comparison-of-the-Domestic-Asset-Protection-Trust-Statutes-Updated-through-April-2014.pdf

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Inflation Adjustments are in for 2015

Unified estate and gift tax exclusion amount. For gifts made and estates of decedents dying in 2015, the exclusion amount will be $5,430,000 (up from $5,340,000 for gifts made and estates of decedents dying in 2014). Generation-skipping transfer (GST) tax exemption. The exemption from GST tax will be $5,430,000 for transfers in 2015 (up from $5,340,000 for transfers in 2014). Gift tax annual exclusion. For gifts made in 2015, the gift tax annual exclusion will be $14,000 (same as for gifts made in 2014). Increased annual exclusion for gifts to noncitizen spouses. For gifts made in 2015, the annual exclusion for gifts to noncitizen spouses will be $147,000 (up from $145,000 for 2014). Reporting foreign gifts. If the value of the aggregate “foreign gifts” received […]

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Japan First in Integrating Digital and Physical Death Planning

As Reported in The Digital Beyond: Yahoo Japan recently launched a new service, Yahoo Ending, which on the surface appears to be their own version of Google’s Inactive Account Manager. On second look, the Ending service is much more. The basic service, free to all Yahoo Japan users, allows users to deactivate their Yahoo Japan accounts upon death. The service will also delete files from Yahoo Box accounts and cancel subscriptions using Yahoo Wallet. In accordance with Yahoo’s stance on accounts after death, there is not an option to share files with your family, as with Google’s solution. Yahoo Ending is also a posthumous email system and online memorial. For a small fee, Yahoo will send a pre-written email to to 200 addresses. For the […]

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