Beginning 2019, Maryland joined Hawaii in allowing portability of its estate tax exclusion. Unique to Maryland is that it allows portability retroactively for deceased spouses who died between 2011 and 2018. Tax benefits are typically not granted based on facts occurring in past years. This surprising development now places the onus on surviving spouses, professional fiduciaries and advisors to be vigilant in determining the application of these rules.
This past week was a big one for the venerable estate tax, now 102 years old – Revenue Act of 1916 passed September 8, 2016. Democrats put forth proposals for stiffening the estate tax – by decreasing the exclusion, increasing the rate and eliminating certain planning techniques (so-called “loopholes”, some of which are currently officially sanctioned by Congress in the estate tax statutes). Senator Warren advocated a wealth tax. The Washington Post alone had eight articles about the estate tax from Sunday, February 3rd to February 6th. The paper’s lead editorial on Monday, February 4th, supported the imposition of a more robust estate tax.
"The UVTA presents serious problems for estate and tax planners. For those states that are considering passage of the UVTA, education is tantamount to understanding the underlying dangers of the UVTA. The statutory solutions present in this newsletter will help neutralize those dangers and allow estate planners and creditors' attorneys to co-exist peacefully within the UVTA realm.
The recent passage of the 2017 Tax Act (the "Tax Act") brought many changes for business and individual taxpayers. Many of the income tax changes have been highly publicized, such as the decrease of individual income tax rates, the reduction in the taxability of income from certain pass-through entities and the reduction of the state and local tax deduction.
This Alert focuses on the lesser publicized but no less significant impact of the Tax Act on divorce -- even though the changes do not take effect until 2019, the effects can be far reaching.
The President signed Public Law No. 115-97, formerly known as the Tax Cuts and Job Act, into law on December 22nd (hereinafter the "Act"). Among other sweeping changes, the Act doubles the base lifetime gift and estate tax exclusion and GST tax exemption of $5 million to $10 million, as indexed for inflation. For 2018, this translates to an exemption amount of roughly $11.2 million per person.
Beginning in 2026, the gift and estate tax exclusion and GST tax exemption return to their base amount of $5 million, as they would have been indexed for inflation. Thus, as enacted, the increase is temporary.
Following the Act's changes, it may be necessary to review your documents to avoid unintended results in the future and to best achieve your tax planning goals.
As of today, May 1, 2017, McArthur Franklin PLLC will be known as Franklin Karibjanian & Law PLLC, with George Karibjanian and Lester Law joining Richard Franklin as partners. The firm will continue the proud tradition started by Ginny McArthur more than 20 years ago of a boutique trusts and estates law firm located in the Nation's Capital. Our services will focus on tax and estate planning, trust and estate administration, business succession planning, trustee and beneficiary representation and asset protection planning.