The Rush to Avoid Gift Taxes

Family Value: The Rush to Avoid Gift Taxes - WSJ.com (JEH: This is an excellent, brief article on several key trust planning concepts related to the potential use of the current $5 million estate/gift/generation-skipping transfer (GST) tax exemption. I have posted other articles on this topic over the past year or so. Many practitioners and commentators have suggested self-settled spendthrift trusts (also known as "domestic asset protection trusts" (DAPTs)), which this article highlights, as part of this type of planning. These trusts are generally not advisable for effective protective planning, but can indeed be useful in the context of making a completed gift for federal transfer tax purposes in this current exemption scenario because they offer added flexibility (though, again, likely little if any actual protection for the grantor(s) (also known as the settlors or makers of the trust)). If you are considering this type of planning, you should commence sooner rather than later. If you wait until November or December 2012, you will probably be too late.)

president obama budget proposal estate planning

Change is on the Way: President Obama’s proposals for estate planning in 2013 and beyond - WEALTH WATCH - Trusts & Estates Magazine (JEH: The current administration's proposals make planning during 2011 and 2012 even more important. The current $5 million gift tax exemption, which is the highest in history (except during times when these federal transfer taxes did not exist), would be decreased to the $1 million exemption under the 2001 tax act. The estate and generation-skipping transfer (GST) tax exemption, which are also currently $5 million, would return to their $3.5 million levels under the 2001 tax act. In addition, the proposals suggest a 90 year "term limit" on trusts designed to optimize these exemptions (essentially a tax-oriented version of the rule against perpetuities) in order to limit their effectiveness (which of course means taxing those assets more often as they pass from one generation to the next). Consequently, planning to utilize the current exemption is critical for anyone whose assets would exceed the revised exemptions, including those whose assets would appreciate beyond those limits. With the possibility of future inflation, that might be more folks than anyone thinks now.)

Additional repeal coverage at Heckerling Institute

Although I will miss the Heckerling Institute this year (only the second time in a decade), those who are attending should note the additional coverage/sessions on repeal of the federal estate tax. Additional details are available on the UM website (here). Advisers dealing with any aspect of estate planning should consider attending the Institute, as it is definitely the best in the country. I will miss participating in the ABA reporting team led by Joe Hodges, Esq., but will be reading their excellent coverage via the ABA-PTL list (here) or the ABA website (here) and would encourage other advisers to do the same.