Doubling Down: Gift, Estate and GST Tax Changes Under the Tax Cut and Jobs ActDecember 20, 2017 – Client AlertGreenberg Glusker Client Alert On December 20, 2017, Congress approved sweeping tax reform legislation under the “Tax Cuts and Jobs Act.” The President is expected to sign the Act into law before the end of the year. Although the Act contains numerous provisions with a substantial impact on the income tax liability of individuals, families and businesses, the changes to the gift, estate and generation-skipping transfer (GST) taxes are more modest, and are outlined below. Gift and Estate Tax Credit Doubles Under current law, the credit against the gift and estate tax (the “Credit”) allows a taxpayer to transfer up to $5 million, adjusted for inflation, before any gift tax (for lifetime transfers) or estate tax (for transfers at death) is payable. The Credit in 2017 shields the first $5.49 million of gifts1 from tax and is scheduled to increase to $5.6 million in 2018. Once the Credit has been exceeded, the gift or estate tax, as applicable, is imposed at a 40% tax rate. Effective January 1, 2018, and until December 31, 2025, the Credit is doubled to $10 million, adjusted for inflation. Thus, the inflation-adjusted Credit amount in 2018 will be $11.2 million per individual ($22.4 million per married couple). As with existing law, once the Credit has been exceeded, the gift or estate tax, as applicable, continues to be imposed at a 40% tax rate. Absent further legislation, the Credit will return to its current level of $5 million, adjusted for inflation, beginning January 1, 2026. Exemption from GST Tax Doubles Under current law, the exemption from the GST tax (the “Exemption”) allows a taxpayer to transfer up to $5 million, adjusted for inflation, before any GST tax is payable on transfers to grandchildren or other individuals two or more generations below the generation of the taxpayer. The Exemption in 2017 shields the first $5.49 million of transfers from the GST tax and is scheduled to increase to $5.6 million in 2018. Once the Exemption has been exceeded, the GST tax is imposed at a 40% tax rate. The GST tax is in addition to the gift or estate tax. Effective January 1, 2018, and until December 31, 2025, the Exemption is doubled to $10 million, adjusted for inflation. Thus, the inflation-adjusted Exemption amount in 2018 will be $11.2 million per individual ($22.4 million per married couple). As with existing law, once the Exemption has been exceeded, the GST tax continues to be imposed at a 40% tax rate. Absent further legislation, the Exemption will return to its current level of $5 million, adjusted for inflation, beginning January 1, 2026. [1] Not all gifts are subject to tax. Exceptions include (1) transfers to a U.S. citizen spouse, (2) transfers to charity, (3) lifetime payments made directly to a qualified school for tuition, (4) lifetime payments made directly for health care expenses, and (5) lifetime transfers to an individual recipient not exceeding the annual exclusion amount in a calendar year, which will be $15,000 for 2018. For more information on how the Act could impact you, please contact a member of Greenberg Glusker’s Private Client Services Group: Marc M. Stern | email Laura A. Zwicker | email Brian D. Berman | email Darryl Cluster | email Stefanie J. Lipson | email © 2017 Greenberg Glusker Fields Claman & Machtinger LLP. All rights reserved. This Client Alert contains information of a general nature that is not intended to be legal advice. Should you wish to rely on the information transmitted, please contact a legal professional first. Providing this Client Alert does not create an attorney-client relationship with the recipient. Greenberg Glusker Fields Claman & Machtinger LLP (the “Firm”) does not represent or warrant that this Client Alert contains information that is true or accurate in all respects or that is the most current or complete information on the subject matter covered. You have received this Client Alert because of our belief that you may have an existing business relationship with the Firm or have indicated a desire to receive such communications. This bulletin may constitute attorney advertising. Prior results do not guarantee a similar outcome.
Doubling Down: Gift, Estate and GST Tax Changes Under the Tax Cut and Jobs ActDecember 20, 2017 – Client AlertGreenberg Glusker Client Alert On December 20, 2017, Congress approved sweeping tax reform legislation under the “Tax Cuts and Jobs Act.” The President is expected to sign the Act into law before the end of the year. Although the Act contains numerous provisions with a substantial impact on the income tax liability of individuals, families and businesses, the changes to the gift, estate and generation-skipping transfer (GST) taxes are more modest, and are outlined below. Gift and Estate Tax Credit Doubles Under current law, the credit against the gift and estate tax (the “Credit”) allows a taxpayer to transfer up to $5 million, adjusted for inflation, before any gift tax (for lifetime transfers) or estate tax (for transfers at death) is payable. The Credit in 2017 shields the first $5.49 million of gifts1 from tax and is scheduled to increase to $5.6 million in 2018. Once the Credit has been exceeded, the gift or estate tax, as applicable, is imposed at a 40% tax rate. Effective January 1, 2018, and until December 31, 2025, the Credit is doubled to $10 million, adjusted for inflation. Thus, the inflation-adjusted Credit amount in 2018 will be $11.2 million per individual ($22.4 million per married couple). As with existing law, once the Credit has been exceeded, the gift or estate tax, as applicable, continues to be imposed at a 40% tax rate. Absent further legislation, the Credit will return to its current level of $5 million, adjusted for inflation, beginning January 1, 2026. Exemption from GST Tax Doubles Under current law, the exemption from the GST tax (the “Exemption”) allows a taxpayer to transfer up to $5 million, adjusted for inflation, before any GST tax is payable on transfers to grandchildren or other individuals two or more generations below the generation of the taxpayer. The Exemption in 2017 shields the first $5.49 million of transfers from the GST tax and is scheduled to increase to $5.6 million in 2018. Once the Exemption has been exceeded, the GST tax is imposed at a 40% tax rate. The GST tax is in addition to the gift or estate tax. Effective January 1, 2018, and until December 31, 2025, the Exemption is doubled to $10 million, adjusted for inflation. Thus, the inflation-adjusted Exemption amount in 2018 will be $11.2 million per individual ($22.4 million per married couple). As with existing law, once the Exemption has been exceeded, the GST tax continues to be imposed at a 40% tax rate. Absent further legislation, the Exemption will return to its current level of $5 million, adjusted for inflation, beginning January 1, 2026. [1] Not all gifts are subject to tax. Exceptions include (1) transfers to a U.S. citizen spouse, (2) transfers to charity, (3) lifetime payments made directly to a qualified school for tuition, (4) lifetime payments made directly for health care expenses, and (5) lifetime transfers to an individual recipient not exceeding the annual exclusion amount in a calendar year, which will be $15,000 for 2018. For more information on how the Act could impact you, please contact a member of Greenberg Glusker’s Private Client Services Group: Marc M. Stern | email Laura A. Zwicker | email Brian D. Berman | email Darryl Cluster | email Stefanie J. Lipson | email © 2017 Greenberg Glusker Fields Claman & Machtinger LLP. All rights reserved. This Client Alert contains information of a general nature that is not intended to be legal advice. Should you wish to rely on the information transmitted, please contact a legal professional first. Providing this Client Alert does not create an attorney-client relationship with the recipient. Greenberg Glusker Fields Claman & Machtinger LLP (the “Firm”) does not represent or warrant that this Client Alert contains information that is true or accurate in all respects or that is the most current or complete information on the subject matter covered. You have received this Client Alert because of our belief that you may have an existing business relationship with the Firm or have indicated a desire to receive such communications. This bulletin may constitute attorney advertising. Prior results do not guarantee a similar outcome.
