Estate and Gift Planning Safe from Fiscal Cliff II Revenue Raising?

Our relief after learning of the continuation of the existing tax regime on December 32nd (true, right?) is tempered by the recognition that $3.63 Trillion needs to be added to revenues in the coming decade to pay for the tax benefits we enjoy.  Obama’s estate and gift tax proposals in this area are still on the table, including:

  1. Elimination of the discounts on fractional gifts of business interests for “marketability”.  Marketability is the largest component by far in our discount planning, and this would be very painful.  Discounts for “lack of control”, also called the minority interest discount, would remain.
  2. Unification of the estate/gift and income tax regimes by terminating the use of Grantor Trusts-the foundation of many of our most treasured planning techniques;
  3. Limit the duration of the protection of the GST Exemption to 90 years;
  4. Limit the minimum term of GRATs to 10 years.

Obviously, we all are thinking that the $24 billion which might be raised by these over ten years may be below the radar of negotiators over the next few months.  That is wishful thinking, and we will let you know when more definitive indications become apparent.

Posted in Status of Tax Legislation, WillPlan Blog.

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