Quinn DeAngelis, P.C.
Kierland Business Center
15849 N. 71st Street, Suite 100
Scottsdale, Arizona 85254
ESTATE PLANNING UPDATE
1. 2007 Annual Gift Tax Exclusion: $12,000 per donor, per donee.
2. Lifetime Gift Tax Exclusion: $1,000,000.
3. 2007 Estate Tax Tax Exclusion: $2,000,000.
4. Marital Deduction for Transfers to U.S. Spouse: Unlimited.
5. 2007 Generation Skipping Transfer Tax Exclusion: $2,000,000.
6. Top Federal Estate, Gift and Generation Skipping Tax Rate: 45%.
7. Federal Legislation. In 2005, Congress introduced several bills repealing the Federal Estate Tax and replacing it with a capital gains tax, only to be derailed by hurricane Katrina. It is likely that 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 remains unchanged. The Probate and Trust Section of the State Bar is currently working on legislation that would contain a majority of the provisions that were included in the previously enacted Uniform Trust Code, but there are still several unresolved issues.
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.