2015 Estate, GST and Gift Tax Update

2015 Federal Estate, GST and Gift Tax Update

January 2015

Federal estate tax exemption:
The federal estate tax exemption increased to $5,430,000 in 2015 (up from $5,340,000 in 2014). This means that individuals can make gifts during life or transfers at death of up to this new higher limit and owe no federal estate tax. The top federal estate tax rate remains unchanged at 40% (same as 2014).
Generation-skipping transfer (GST) tax exemption:
The exemption from GST tax also increased to $5,430,000 in 2015 (up from $5,340,000 for transfers in 2014).
Massachusetts estate tax exemption:
The Massachusetts estate tax exemption remains unchanged at $1,000,000.
Annual exclusion for gifts to non-citizen spouses:
The annual exclusion for gifts made in 2015 to non-citizen spouses increased to $147,000 (up from $145,000 in 2014).
Annual exclusion for gifts to non-spouses:
The annual exclusion for gifts made in 2015 to non-spouses remains at $14,000 (same as 2014).

Material presented on the King & Navins, P.C. website is intended for information purposes only. It should not be construed as legal advice or the formation of an attorney-client relationship. Please consult an attorney for individual advice regarding your own personal situation.

Funding your Revocable Trust to Avoid Probate

September 2013

Upon death, your individually held assets (assets that are not held jointly and do not have a beneficiary designation) pass through your Will to your named beneficiaries. If you have no Will, such assets pass by the laws of intestacy. Either way, your estate would need to go through a process in the Probate Court known as “probate”. The probate process requires newspaper notices, an appointment of a Personal Representative, letters to heirs, and a statutory waiting period, all of which can be quite costly and time-consuming. The records of your Estate, including your Will, if any, and often an Inventory of your assets, become part of the public record.

A Revocable Trust is an estate planning tool that, among other things, allows you to avoid the probate process while maintaining control of your assets. During your lifetime, you can transfer title of your assets to the name of your Revocable Trust. You, as Trustee, would have complete control over all trust property, just as you did when the assets were in your individual name. You can pay expenses, make gifts, take out a mortgage, or do anything else associated with owning and enjoying property. During your lifetime, your Revocable Trust is not a separate tax paying entity for income tax purposes, and all income earned on Trust-owned assets would be reported on your own individual income tax return.

Upon death, your successor Trustee would be able to distribute Trust assets to beneficiaries of your choice in accordance with the terms of your Trust without any court involvement.

By funding your Revocable Trust during your life, you avoid the onerous and expensive probate process, and simplify and expedite the process of transferring assets upon death.

Material presented on the King & Navins, P.C. website is intended for information purposes only. It should not be construed as legal advice or the formation of an attorney-client relationship. Please consult an attorney for individual advice regarding your own personal situation.

The American Taxpayer Relief Act of 2012: Estate, Gift and GST Tax

January 2013

On New Year’s Day 2013, Congress passed “The American Taxpayer Relief Act of 2012,” (the “Act”) which President Obama signed into law on January 2nd.  As many taxpayers were aware, the absence of action on Congress’ part could have meant the reversion of the 2012 estate, gift and generation-skipping transfer (GST) tax exemptions of over $5 million, and a maximum tax rate of 35%, to exemptions of $1 million, with a maximum tax rate of 55%.

The Act provides as follows:

  • Exemption Level:  The estate, gift, and GST tax exemptions are set at $5 million, indexed for inflation.  The inflation-adjusted exemptions for 2013 are $5.25 million.
  • Tax Rate: The top gift and estate tax rate now stands at 40%, a slight increase from the 35% rate in effect in 2012.  The GST rate is now 40%.
  • Portability: A surviving spouse may add the unused exemption of the first spouse to die to the surviving spouse’s own available exemption.  In order to preserve any unused exemption, a portability election must be made on a federal estate tax return upon the first spouse’s death.

Unlike prior laws, the Act is permanent, and is not automatically scheduled to adjust or sunset unless and until Congress changes the new rules.

Keep in mind that the Act does not alter the current Massachusetts exemption or rate.  The Massachusetts estate tax exemption remains at $1 million, with a maximum rate of 16%.

Material presented on the King & Navins, P.C. website is intended for information purposes only. It should not be construed as legal advice or the formation of an attorney-client relationship. Please consult an attorney for individual advice regarding your own personal situation.

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Material presented on the King & Navins, P.C. website is intended for information purposes only. It should not be construed as legal advice or the formation of an attorney-client relationship. Please consult an attorney for individual advice regarding your own personal situation.