Estate Planning Changes for 2015

2015 is the year when big changes can be expected in Estate Planning. The Green Book of 2014 already outlined certain proposals that give a clue as to what 2015 might hold for Estate Planning.

Here’s a look at the estate planning changes for 2015 –

• 2009 Rules Applicable for GST, Gift and Estate Tax – The major proposal of the Obama Administration’s estate planning changes for 2015 is to revert back to the 2009 rules and restore GST, gift and estate tax. As per the proposal, the exemption amount of GST and estate tax can be expected to reduce to $3.5 million and the reduction for gift tax would be $ 1 million. Indexation for inflation would not be done for these amounts. Top tax rate would also increase to 45% from 40%.

• Exchanges, Sales and Other Comparable Transactions with IDGTs – When it comes to IDGTs, there is disconnect between the Estate tax laws and the income tax laws, and this would be addressed in 2015. Thus, the property portion of the grantor trust net of individual consideration that the person receives would be subject to estate tax, gift tax and transfer tax when certain conditions are satisfied.

• Restrictions on GRATs – More restrictions would be imposed on GRATs by the Obama Administration. This includes 10 year minimum term and thus, elimination of short term GRATs. Also proposed is a requirement of minimum taxable gift and prevention of front-loading of GRAT annuity. The 99 Year GRAT abuse would be controlled by adding 10 years to the life expectancy of the annuitant and limiting the GRAT’s maximum term.

• Proposals Related to IRAs and Qualified Plans –

Ø Limiting Retirement Benefits Accrual – Additional accruals received and additional contributions would be prohibited when the retirement benefits exceed a certain limit.

Ø Non-Spouse Beneficiaries of IRAs and Qualified Plans – The distributions taken by non-spouse beneficiaries would not be more than 5 years except for beneficiaries who are minors, chronically ill, disabled and younger than the IRA owner or participant by up to 10 years.

Ø 60 Day Rollovers for Non Spouse Beneficiaries – Thus, surviving spouses and non-spouse beneficiaries would enjoy the same treatment.

Ø Exemption for IRA Owners and Participants – This would apply in case of minimum distribution when the benefits aggregate to less than $75,000.

Other estate planning changes for 2015 can be read here.

For advice related to estate planning, you should engage our services. Call us now and ensure that the future of you and your loved ones is always secure.