Estate Planning Update


  1. 2016 Annual Gift Tax Exemption:  remains at $14,000 per donor, per donee.
  2. 2016 Gift and Estate Tax Exemption:  rose to $5,450,000 per donor, inflation adjusted.
  3. Marital Deduction for Transfers to U.S. Spouse:  unlimited.
  4. 2016 Generation Skipping Tax Exemption:  $5,450,000 per donor, inflation adjusted.
  5. Top rate for Federal Estate, Gift and Generation Skipping Taxes: 40%.
  6. National Topics:  The big news from the end of 2015 was the passing of the Protecting Americans from Tax Hikes (PATH) Act. Most notably, the PATH Act permanently extends the ability of an IRA owner who is 70½ to annually exclude from gross income up to $100,000 by distributing it directly to a charity. A great way to satisfy charitable gifts and your minimum distribution requirements.  This year expect the President and Congress to spar over closing benefits to estate tax minimization strategies of GRATs, SCINs and defective grantor trusts.  Given the election year, expect a lot of talk and no action.  In a more practical move, Facebook users now can designate a “legacy contact” which serves as a reasonable alternative to freezing or deleting the account and I recommend doing so immediately.
  7. Arizona Topics:  Arizona has yet to enact a digital asset act, so it is incumbent on you to maintain a list of accounts and passwords so your fiduciaries can control such items upon your death or incapacity.  Also, a 2015 Arizona case demonstrates how “will contest” provisions create more litigation than they prevent.  The end result is that such provisions should be used sparingly and only after careful consideration.
  8. Planning Issues to Review:  (i) Is my named successor trustee appropriate under the circumstances?  (ii) Is the A/B or bypass trust structure still appropriate if my assets are less than the Estate Tax Exemption?  (iii) Who should I name as the beneficiary of my Individual Retirement Account and/or 401k? (iv) What can I do now to ease the transition upon my death or disability? (v) Have I communicated in writing my desires for funeral/memorial services and burial or cremation?
  9. Planning Opportunities:  asset valuations have increased, but interest rates are still at historically low levels. This makes lending money to your beneficiaries extremely attractive as a simple tool to reduce your estate and increase purchasing power.  We also continue to restructure or kill old irrevocable trusts.  If you want to explore the alternatives available to you, please give me a call.
  10. Quinn News:  We are up and running at the new office, so stop by if you are in the neighborhood. Nothing like a competitive game of shuffleboard to end your day.