TULANE TAX INSTITUTE October 31 November 2, 2012 5948591
Rates & Exemptions $5.0 Mil. $5.0 Mil. $5.12 Mil. $3.5 Mil. $1.0 Mil. Estate Tax Exemption 2009 2010 2011 2012 2013 $5.0 Mil. $1.0 Mil. $1.0 Mil. $1.0 Mil. Gift Tax Exemption $5.0 Mil. $5.0 Mil. $5.12 Mil. $3.5 Mil. $1.35 Mil. GST Tax Exemption 2009 2010 2011 2012 2013 55% 45% 35% 35% 35% Top Transfer Tax Rate 2009 2010 2011 2012 2013
No Congressional Action -Provisions sunset and return to 2001 tax Act Transfer Taxes Repealed Current provisions become a 2-year extender Permanent unified transfer tax -Exemptions (indexed?) -Rates?
Calendar Year Estate Tax Exemption GST Tax Exemption Gift Tax Exemption Top Estate, GST and GIFT Tax Rates Effective Combined Gift and GST Tax Rates on a new $4.12mm gift to Grandchildren 2012 $5.12 million $5.12 million $5.12 million 35% 0.00% 2013 $1 million $1.4 million (Est.) $1 million 55%* 131.73% *60% for estates over $10 million until the benefit of the exemption is recaptured.
Clawback?
Removes $5,120,000 from estate Removes future appreciation and income Grantor can pay income taxes Utilize valuation discounts Donee enjoys the gifted assets Avoid State estate tax
Client's financial needs Client's wishes Uncertainty Complexity
Client's financial needs Client's wishes Uncertainty Complexity
Client's financial needs Client's wishes Uncertainty Complexity
Client's financial needs Client's wishes Uncertainty Complexity
Appreciation potential Fractionalized assets Special use assets Closely-held business interests
Appreciation potential Fractionalized assets Special use assets Closely-held business interests
Appreciation potential Fractionalized assets Special use assets Closely-held business interests
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
November 2012
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Forgiveness of loans Pay off children's mortgages Equalize prior family gifts Eliminate retained interests or powers Non-qualified disclaimers Transfer of GP or control interests ILIT Funding
Targeted Planning
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust
Outright gift Trust for descendants Lifetime credit shelter trust Mutual but not reciprocal - spousal trusts Grantor trust GST exempt trust Valuation discounts Installment sale to grantor trust