Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 33 years.

If Obama’s tax codes are approved they will have an impact on estate planning.

While it appears there is little chance of approval, Obama’s final budget plan submitted to Congress has tax code changes that will have an impact on estate planning. The proposed changes were discussed recently in the National Law Review article “Any Estate Tax Changes on the Horizon?

The proposals include:

  • Reducing the estate tax exemption from the current $5 million per individual to $3.5 million and raising the rate from the current 40% to 45%.
  • Making it more difficult to use advanced estate planning techniques such as GRATS, defective trusts and gift/sale agreements to get around the estate tax.
  • Capping Crummey gifting at $50,000 per year instead of the current unlimited amount.
  • Doing away with the step-up basis for inherited capital gains.

It does not appear that the House of Representatives will even debate President Obama’s budget proposals this year, so these tax changes are currently unlikely. However, there is always the possibility that the President and congressional leadership will need to compromise to get a budget passed.

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