Estate Planning Update

 July, 2017

  1. 2017 Annual Gift Tax Exemption:  remains at $14,000 per donor, per donee.
  2. 2017 Gift and Estate Tax Exemption:  rose to $5,490,000 per donor, inflation adjusted.
  3. Marital Deduction for Transfers to U.S. Spouse:  unlimited.
  4. 2017 Generation Skipping Tax Exemption:  $5,490,000 per donor, inflation adjusted.
  5. Top rate for Federal Estate, Gift and Generation Skipping Taxes: 40%.
  6. 6.  National Topics:  As I predicted last year, there has been lots of talk and no action on the federal estate tax. Given the lack of progress on healthcare reform and income tax overhaul, I doubt we are going to see any movement in the near future.
  7. Arizona Topics:  Check your older LLC formation documents for dissolution dates! Pursuant to a change in A.R. S. §29-786 starting August 9, 2017 several thousand LLCs will be administratively dissolved if their articles have a dissolution date and that date has passed.  In addition, several operating agreements I have reviewed lately state that the entity dissolves upon the death of the member, the very time when we want it to continue.  Dissolution can have significant tax and legal consequences.  If you want to avoid dissolution, simply amend the Articles to elect perpetual existence or modify the Operating Agreement to allow the entity to continue upon death or disability.  Needless to say, this is a good time to check your corporate records and determine if everything is up to date.
  8. Planning Issues to Review:  Keep your originals in a safe place. We have seen an increase in lost documents over the last year, complicating administration upon a death or disability and in some cases increased expenses for re-creating documents.  Best practice is to put your eyes on the documents every couple years and let us or your successor fiduciary know where they are kept.  If it has been more than five years, it is time to dust off those old documents and have a comprehensive review of your estate plan.
  9. Planning Opportunities:  Interest rates and asset values have risen over the last year, which makes the hurdles for sophisticated estate tax planning techniques more difficult to implement successfully. However, in certain circumstances we still are using GRATS and loans to your beneficiaries as relatively simple tools to reduce your estate tax exposure.  If you want to explore the alternatives available to you, please give us a call.
  10. Quinn News:  This fall I will celebrate my 25th anniversary practicing law. From a small firm to large firm and back to small, it has been quite a journey.  I appreciate the opportunity to provide services to you all and am looking forward to the next 25!  As my dear friend said way back in 1992 ” …someday I may even get it right.”  Smile, Q.