Monday, May 26, 2014
The Treasury Department recently released its 2015 Green Book defining the administration’s budget proposals for the coming year. In regards to transfer taxes, the budget renews every transfer tax proposal from the FY2014 budget in a similar form, some of which include:
- A reinstatement of 2009 transfer tax laws with portability beginning in 2018.
- Require the basis of the property in the hands of the recipient of a gift or devise can be no greater than the value of that property determined for estate or gift tax purposes.
- Ten-year minimum term for GRATs.
- Elimination of GST tax benefits for health, education and exclusion trusts.
The budget adds another new proposal that deals with annual exclusion gifts made to trusts or other entities where the donee does not have immediate use of the funds. The IRS has been concerned that Crummey powers could be given to multiple discretionary beneficiaries, many of whom would never receive a distribution from the trust, thus inappropriately excluding large amounts of contributions made to the trust from gift tax. The proposal would define a new category of transfers, thereby allowing an annual exclusion of $50,000 per donor on transfers. This proposal could simplify insurance trust funding and eliminate the problems associated with Crummey notice administration.
See Julius Giarmarco, President’s Plans For Estate, Gift and GST Taxes, ProducersWeb.com, May 9, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.