Permanent Estate Tax Regime? Not So Fast

It’s not news that President Obama has always fought to increase transfer taxes. In the past, he has proposed restoring transfer taxes to 2009 levels and curtailing various estate planning techniques. While these proposals (which are made once again this year) make us question whether the $5 million exemption amount (indexed for inflation) and 40% rate passed over two years ago under the American Taxpayer Relief Act of 2012 (ATRA) really are permanent, so far, these proposals have not been able to advance in Congress.

What is newsworthy is that this year the President is proposing some surprising new proposals that many have classified as bold and new. For example, the proposed modification of the annual gift tax exclusion would eliminate the present interest requirement for §2503(b) annual exclusion gifts. However, there would be an annual limit of $50,000 (indexed for inflation) per donor on certain types of transfers that would qualify for the annual gift tax exclusion, including most transfers in trust.

To read more about the President’s proposals, see Treasury’s “General Explanations of the Administration’s Fiscal Year 2016 Revenue Proposals."