New Tax Law Shifts Estate, Gift Planning Focus for Practitioners

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Enactment of new estate tax law has not changed income tax issues or estate planning techniques, although it has changed the focus on which techniques are most appropriate, several estate tax attorneys say in a BNA Tax and Accounting seminar. Executors now have the ability to make $5 million in taxable gifts without any estate tax, says Jerome Hesch, of counsel with Carlton Fields in Miami. For instance, it may have been advantageous for a client with a certain net worth to engage in a grantor retained annuity trust or an installment sale prior to the passage of the Tax Relief Act of 2011, but a simple outright gift might now be better, he adds. Hesch also says the way the law now stands there is no clawback tax obligation for people who make gifts in 2011 and 2012 that exceed their post-2012 estate tax exemption allowance. If a client makes a $5 million taxable gift there will be no further tax on that $5 million, even if rates go up and the unified credit goes down, he says.