2010 Tax Relief Act: Is it Time to Give?

more+
less-

The enactment of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the “2010 Tax Relief Act”) on December 17, 2010, created the opportunity to make larger non-taxable gifts than ever before under the modern federal estate and gift tax systems. But it also created many questions and uncertainties. While practitioners and clients applauded the increased “lifetime” exemption to $5,000,000, care and thought must be taken before making a substantial gift.

Due to the reunification of the estate, gift and generation-skipping transfer tax system, a $5,000,000 exemption is now applicable to estate, gift and generation-skipping taxes. This allows a substantial amount of wealth to be transferred without incurring what was previously an onerous tax. Indeed, in addition to the significant increase from the previous $1,000,000 exemption on lifetime gifts, the 2010 Tax Relief Act also capped the highest gift tax rate at 35%, which is a significant savings from the previous gift tax rate of 45%. Left unaffected is the annual gift exclusion of $13,000 per year per recipient, which is subject to future adjustment for inflation.

Taking advantage of the increased lifetime exemption may require fairly swift action. The 2010 Tax Relief Act is effective only through December 31, 2012. Unless Congress passes new legislation, the 2001 Internal Revenue Code provisions will be reinstated beginning January 1, 2013. For gifting purposes, that means the exemption will drop back to a $1,000,000 lifetime exemption and the top gift tax rate will jump to 55% from 35%.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Partridge Snow & Hahn LLP | Attorney Advertising

Written by:

more+
less-

Partridge Snow & Hahn LLP on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×