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Posted on Mar 5 2017 8:00PM by Attorney, Jason A. Lee
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The IRS
has introduced new cost of living adjustments to the federal estate and
gift tax exemption someone can use over their lifetime. The new federal estate and gift tax exemption
will be $5.49 million dollars in 2017.
This is an increase from the prior exemption of $5.45 million for 2016. As a result, an additional $40,000.00 can be
passed on by gift or in your estate, tax free starting in 2017.
Unfortunately, the annual tax free gift
exclusion amount stays at the same level at a total of $14,000.00 (this amount
has been in place since 2013). This is
the annual dollar amount of gifts that can be given to an individual without
counting toward the lifetime consolidated exemption of $5.49 million for 2017. As a result, each year you can give up to
$14,000.00 to an individual using the annual gift tax exclusion (in fact a
married couple can each give the $14,000.00 – totaling $28,000.00 for each
calendar year). These gifts will not
count towards your lifetime exemption amount for the Federal Estate tax.
Estate taxes are becoming less relevant to
the majority of Americans due to the “permanent” fix that was provided by the
federal government a few years ago. The
estate tax simply does not impact the vast majority of people. Additionally, the Tennessee inheritance tax is
now abolished in Tennessee for any person who dies in 2016 or later. It simply does not exist any longer. So there are no separate considerations
needed to handle any Tennessee inheritance tax.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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Posted on Jan 3 2016 4:35PM by Attorney, Jason A. Lee
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The IRS recently introduced
new cost of living adjustments to the lifetime federal estate and gift tax
exemption. The new federal estate and gift
tax exemption will be $5.45 million dollars in 2016. This is an increase from the prior exemption
of $5.43 million for 2015. This is
therefore an increase of $20,000.00 that can be passed on by gift or in your
estate, tax free starting in 2015.
Unfortunately, the annual tax free gift
exclusion amount stays at the same level at a total of $14,000.00. This is the annual amount of gifts that can
be given to an individual without counting toward the lifetime consolidated
exemption of $5.45 million for 2016. As
a result, each year you can give up to $14,000.00 to an individual using the
annual gift tax exclusion. These gifts
will not count towards your lifetime exemption amount.
As I have stated before on this blog, estate
taxes are becoming less relevant to the vast majority of Americans due to the
“permanent” fix that was provided by the federal government a few years ago. The estate tax simply does not come into play
for most people. Additionally, the
Tennessee inheritance tax is now abolished in Tennessee for any person who dies
in 2016 or later. It simply does not
exist any longer.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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Posted on Feb 16 2014 11:30PM by Attorney, Jason A. Lee
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A question that is
often asked is whether putting money in a revocable or living trust somehow excludes
that money from the taxable estate for Tennessee or Federal Inheritance tax
purposes. T.C.A.
§ 67-8-307 provides that trust property is included in the taxable estate
when the decedent reserves the right to revoke, alter or amend the trust so the
decedent could retain the property (basically any revocable or living trust). As a result, property in revocable or living
trusts is generally considered to be included in the estate of the decreased
for purpose of Tennessee Inheritance Tax purposes (as well as Federal Estate
tax purposes). T.C.A.
§ 67-8-307 provides as follows:
The gross estate
of a resident shall include property specified in § 67-8-303(a)(1), and the
gross estate of a nonresident shall include property specified in §
67-8-303(a)(2) transferred by the decedent by deed of trust in which the
decedent reserved to the decedent, alone or in conjunction with others, powers
of revocation, alteration or amendment, upon the exercise of which such
property would revert to the decedent, to the extent of the value of such
property subject to such powers and with respect to which such powers remained
unexercised.
You should be very
skeptical of any revocable or living trust product that claims to remove the property
from the taxable estate. Additionally,
keep in mind that in Tennessee the Inheritance Tax will be abolished effective
January 1, 2016. Further the exemption
for the Federal Estate tax is currently at $5,340,000.00 so very few people in
fact actually need to worry about Federal Estate tax. Fear of this tax often drives people to complicated
trust products or expensive estate tax avoidance packages, however, this is
usually unnecessary when simplicity would be the better path to take, when all
things are considered. I preach simplicity in Tennessee estate
planning because often people do not follow through with the more complicated
product designs and 99% (or more) of the population simply does not need
complicated estate planning techniques.
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Posted on Jan 1 2014 10:20AM by Attorney, Jason A. Lee
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Today
the Tennessee inheritance tax exemption (for 2014) is raised to $2,000,000.00. Next year it will increase to $5,000,000.00
and then it will be abolished in 2016.
The Federal inheritance tax exemption (for 2014) was raised to
$5,340,000.00 today. As a result, these
taxes rarely come into play when dealing with estate planning in Tennessee
unless you have a very large estate. Happy New Year!
Follow me on Twitter @jasonalee for updates from the
Tennessee Wills and Estates Blog.
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Posted on Dec 15 2013 4:22PM by Attorney, Jason A. Lee
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A lot of people ask about the possible
taxation of their estate from the federal government – often referred to as the
“estate tax” or “death tax”. For the
vast majority of people, this is an irrelevant issue due to recent changes in federal
tax law that significantly increased the federal estate tax exemption. However, the IRS
has recently announced the new 2014 estate and gift tax exemption. The new 2014 federal estate gift tax
exemption is $5,340,000.00. This an
increase of $90,000.00 over the 2013 estate gift tax exemption of $5,250,000.00. As a result, it is becoming very rare that an
estate will reach this level in Tennessee, although it is still certainly
possible with large estates.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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