Quinn DeAngelis, P.C.
Kierland Business Center
15849 N. 71st Street, Suite 100
Scottsdale, Arizona 85254
ESTATE PLANNING UPDATE
1. 2008 Annual Gift Tax Exclusion: $12,000 per donor, per donee.
2. Lifetime Gift Tax Exclusion: $1,000,000.
3. 2008 Estate Tax Tax Exclusion: $2,000,000.
4. Marital Deduction for Transfers to U.S. Spouse: Unlimited.
5. 2008 Generation Skipping Transfer Tax Exclusion: $2,000,000.
6. Top Federal Estate, Gift and Generation Skipping Tax Rate: 45%.
7. Federal Legislation. We are still waiting for Congress to enact permanent estate tax legislation. Topics include repealing the Federal Estate Tax and replacing it with a capital gains tax, portability, or instead of total repeal, the Unified Credit could be increased to anywhere between $3,000,000 and $5,000,000.
8. State Legislation. The Arizona Trust Code has been revised and will be effective January 1, 2009. Most notably, the legislation lengthens the possible term term of a trust to 500 years, recognizes flat percentage distribution standards, expands creditor protection of certain trusts and requires notice to certain interested parties.
9. Family Entities. The Internal Revenue Service continues to attack family entities that fail to adhere to respect the corporate form. These guidelines are similar to the requirements of operating in the corporate form, i.e., the parties must have a legitimate business purpose, not commingle personal assets/obligations with the business, file the appropriate income tax returns, ensure all intra-family transactions are fair and reasonable, keep accurate books and records, and obtain third-party appraisals to support any discounts taken.
10. Other Techniques. Depending upon a person’s desires and portfolio, there are several techniques available to reduce or defer estate tax obligations. These include spousal transfers, non-taxable gifts, intra-family loans, intra-family sales, charitable gifts, and grantor retained gifts. Each technique must be analyzed before implementation to ensure it meets the person’s objectives and the tax code and regulations.