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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 Jan 1 2015 11:13AM by Attorney, Jason A. Lee
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Today
the Tennessee Inheritance Tax exemption (for 2015) is raised to
$5,000,000.00. Next year the Tennessee Inheritance Tax will be
abolished. Starting January 1, 2016 (for
those who die on or after that date) there will no longer be any Tennessee
Inheritance Tax obligations. The Federal
Estate Tax exemption (for 2015) was raised to $5,430,000.00 today. It is indexed to inflation and should go up
each year. 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 6 2014 3:59PM by Attorney, Jason A. Lee
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The IRS
recently introduced certain cost of living adjustments to the consolidated
federal estate and gift tax exemption.
The new federal estate and gift tax exemption will be $5.43 million
dollars in 2015. This is an increase
from the prior exemption of $5.34 million for 2014. This is therefore an increase of $90,000.00
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 $5.43 million for 2015. As
a result, each year you can give up to $14,000.00 to an individual under the
annual gift tax exclusion without it counting towards your lifetime exemption
amount.
As I have stated before, estate taxes are
becoming less relevant due to the “permanent” fix that was provided by the
federal government a few years ago.
Additionally, the Tennessee inheritance tax exemption will be
$5,000,000.00 in 2015 and it is abolished starting in 2016.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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Posted on Jul 28 2014 10:17PM by Attorney, Jason A. Lee
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The Tennessee Legislature in the 2014
Tennessee Legislative Session passed Public Chapter No. 808
which greatly increases the number of Tennessee estates that do not need to file
any kind of inheritance tax return. This
new bill amended T.C.A.
§ 67-8-409. Prior to this amendment,
estates where an individual died before January 1, 2014 were exempt from filing
a Short Form
Inheritance Tax Return if the gross value of the decedent’s estate did not
exceed $100,000.00 and the trial court waived the requirement. With this new amendment, estates where the
deceased died on January 1, 2014 or after, no Short Form Inheritance Tax Return
is required as long as the gross value of the estate is $1,000,000.00 or less
(and the Court provides a waiver in the Order).
For those who die in 2015, the amount estates can be valued before the
requirement to file an inheritance tax return will be $2,000,000.00. The court can simply waive the filing of the
Inheritance Tax Return upon a statement of the gross amount of the estate (this
is generally done as a matter of course in Tennessee).
As I have previously discussed the
Tennessee Inheritance Tax will be abolished effective January 1, 2016. This new amendment to Tennessee law further
attempts to eliminate the necessity of filing Inheritance Tax Returns with the
Tennessee Department of Revenue.
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 Oct 20 2013 10:33PM by Attorney, Jason A. Lee
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Under T.C.A. § 67-8-306, life insurance policies are
included in the gross estate of the decedent when calculating the size of the
estate of inheritance tax purposes. This
is true whether the policies of insurance are payable to named beneficiaries or
to the decedent’s estates. This is a
general rule and the complete statute is as follows:
(a) If the decedent was a resident of this state, there shall be included
in the gross estate the proceeds of insurance policies payable to named
beneficiaries, or to the decedent's estate, or in such manner as to be subject
to claims against the decedent's estate and to distribution as a part thereof.
(b) This section shall include the proceeds of insurance policies
commonly known as “paid-up contracts” or “investment contracts” or “annuity
contracts” or similar types or forms of policies, the surrender value of which
was subject to the control of the decedent prior to death.
(c) Where life insurance, the proceeds of which are under the control of
the decedent, is left by the decedent in such manner that the proceeds thereof
cannot be subjected to the payment of the decedent's debts and where the
proceeds of such insurance are received by beneficiaries thereof and are not
subjected to the debts of the decedent, the fact that the decedent may have been
insolvent and that a portion of the decedent's debts may remain unpaid shall
not affect the liability for inheritance tax upon such insurance.
A lot of people
forget to consider life insurance policies when making a determination of
potential estate tax liability. This
must be taken into consideration in Tennessee.
Follow me on Twitter at @jasonalee <...
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Posted on Sep 15 2013 9:57PM by Attorney, Jason A. Lee
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The inheritance tax
is due to the Tennessee Department of Revenue nine months after the death of an
individual who owes the tax. T.C.A.
§ 67-8-419(a) provides the following:
(a) The tax
imposed by this part and part 3 of this chapter shall be due and payable nine
(9) months after the death of the transferor, or at the expiration of the
additional time granted by the commissioner pursuant to § 67-8-409, but such
tax may be paid sooner, if assessment thereof has been completed, and if the
personal representative desires to make payment.
It is important to
note that the Commissioner of the Tennessee Department of Revenue has the
ability to provide exceptions when the tax payment within the nine month time
period would cause an undue hardship on the estate. The Department of Revenue and the
representatives of the estate can enter into an agreement for payment of the
inheritance tax in installments or come up with another plan that is
appropriate to handle the situation. T.C.A.
§67-8-419(b) provides as follows:
(b) When it is
shown to the satisfaction of the commissioner that the payment on the due date
of any part of the amount determined to be due would impose undue hardship upon
the estate, or would necessitate the sale of any portion of the estate at a
sacrifice, or at an inadequate price, the commissioner may extend the time for
the payment of any such part of the tax, or may enter into an agreement with
the representative of the estate for the payment of the tax due thereon in
installments. Such an agreement for the payment of the tax in installments, or
for the deferment of payments, shall not affect the liability of the estate for
interest. The running of the statute of limitations for assessment and
collection, as provided in § 67-1-1501, shall be suspended for the period of
any such extension. If an extension is granted, the commissioner may, if the
comm...
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Posted on Jul 29 2013 8:26AM by Attorney, Jason A. Lee
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Under Tennessee law,
jointly held property can be considered part of the deceased individual’s
taxable estate. T.C.A. § 67-8-305 discusses property transfers
that occur upon someone’s death by right of survivorship (often under tenants
by the entirety or tenancy by the entirety) or any payable on death accounts
including joint accounts held in multiple people’s names. Under T.C.A. § 67-8-305, if such transfers occur
between husband and wife at the
death of the decedent then only one half
of the value of the account or property is considered a taxable transfer. However, if the accounts or property are
owned jointly by individuals who are not
husband and wife then the “entire
value of any such property shall be deemed to have been transferred from the
decedent to the survivor” and therefore is subject to the Tennessee
inheritance tax.
Additionally, under
subsection (a)(2) if the survivor who inherits from the decedent who had a
joint account or owned joint property with the decedent actually contributed
money towards the account or purchase, then that amount is deducted from the
value that is considered to be part of the taxable estate. In other words, if the survivor deposited
money in the bank account or paid for part of the property that was jointly
held, then that amount will reduce the taxable estate of the decedent.
T.C.A. § 67-8-305
provides in its entirety as follows:
(a) Whenever any
property was held jointly by the decedent and one (1) or more persons as
tenants by the entirety or otherwise, or was deposited in banks or other
depositories or institutions in the joint names of the decedent and one (1) or
more other persons and was payable to one (1) or more, or to the survivor or
survivors, so that, upon the death of the decedent, the survivor or survivors
became entitled to the immediate possession, ownership or enjoyment of such
property, the entire value of any such property shall be deemed to have been
transferred from the decedent to the survivor or survivors, and such transfer
shall be subject to the inheritance tax imposed by parts 3-5 of this chapter,
except:
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