Estate Tax Warning!

Since last year, the Treasury Department has been working on new rules that are designed to thwart a very mainstream practice used for decades to reduce estate tax, called discounting. Essentially discounting allows taxpayers to legitimately reduce the taxable value of property they pass on to family, so that more assets escape gift and estate taxes. In some cases this can completely eliminate taxes, in others it can still save a bundle, depending of the size of the estate and the timing of transfers. Such discounting has been repeatedly upheld by the tax courts, but the pending changes will virtually eliminate them. On top of Candidate Clinton’s tax proposal to double the number of people who pay estate tax by lowering the tax-free amounts to 2009 levels (to $3.5M estate and $1M gift, a drop in tax free amounts to some $4M estate and $8.5M gift per couple), this could cost many people millions in “needless” taxes. Treasury in early August released the final version of the rules, meaning that families who may be exposed to estate tax but have not used discounting planning only have a limited time – a few months at best to complete a somewhat complicated planning process – to do this before the opportunity is lost. The need for smart estate planning has never been more urgent! If you have questions or think you may be exposed, email Jeff directly at for help.

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