Advertisement

April 23, 2014

'Permanent' Transfer Tax Relief At Last

For the first time in more than a decade, Congress has enacted a permanent set of estate, gift and generation-skipping transfer tax rules. While Congress can always change the law, there is no automatic "sunset" or change built into the current law. 

In a nutshell, the new transfer tax law provides: 

  • $5 million exemption for gift, estate and generation-skipping tax, adjusted for inflation after 2011. The 2013 exemption amount is $5,250,000.
  • Exemption is applied both to lifetime gifts and to transfers at death, and also applies for generation-skipping transfers.
  • Marginal tax rate on transfers above the exemption amount is 40%.
  • Portability is made permanent. This allows a surviving spouse to use the “unused” gift and estate tax exemption (but not generation-skipping tax exemption) of the first spouse to die for the survivor’s lifetime gifts and transfers at death, with certain restrictions.
  • Several helpful generation-skipping tax technical provisions were made permanent.

Other items to consider:

  • The gift tax annual exclusion for 2013 is $14,000, up from $13,000, and is increased to $143,000 for gifts to a non-U.S. citizen spouse.
  • Direct payment of tuition and medical expenses remains gift-tax free in unlimited amounts.
  • The new, higher income tax rates also apply to trusts, which will focus increased attention on income tax planning for trusts.
Copyright © 2014, Sheppard Mullin Richter & Hampton LLP.

About the Author

Associate

Lauren Liebes is an associate in the Tax and Estate Planning Practice Group in the firm's Los Angeles office.

Ms. Liebes specializes in all aspects of family wealth planning. She also advises fiduciaries regarding the administration of trusts and probate cases.

Ms. Liebes also counsels public charities and private foundations in connection with their formation and the tax and other legal issues arising in connection with their operation and management.

213-617-5444

Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statemen