For those who currently have taxable estates, the burning question is, “What planning should or should not be implemented in light of an expected federal estate tax repeal?”

First, a few clarifying points:

1. Taxable Estate: A person has a federal taxable estate if he or she has assets in his/her estate at the time of death valued over $5,490,000 (and $10,980,000, if married and an appropriate tax election is made on the death of the first spouse).
2. S. 205: Death Tax Repeal Act of 2017. On January 24, 2017, Senate Bill – S. 205 was introduced, which eliminates the federal estate tax and generation skipping transfer tax for estates of decedents dying on or after the date of the enactment of the Death Tax Repeal Act of 2017.  The Bill also modifies the existing gift tax law but does not eliminate the gift tax.
3. H.R. 451: Permanently Repeal the Estate Tax Act of 2017. On January 11, 2017, House Bill – H.R.451 was introduced, which eliminates the federal estate tax law for estates of decedents dying after December 31, 2016.

With likely significant changes in the estate and gift tax law, it will be important that those who currently have a taxable estate be proactive in their estate planning, so that if changes occur, immediate action can be taken.

In the event of a repeal, those who have taxable estates should understand the impact on his or her estate and what changes should be considered in the existing estate planning documents:

• Wills and Trusts which contain formula clauses should be reviewed to make sure the provisions meet their objectives and options in the event of repeal.
• The estate plan should be sufficiently flexible to accommodate foreseeable future changes in law.
• Taxable gifts should be delayed until there is a better understanding of the proposed changes and the timing of those changes.
• Income tax and capital gain planning will likely become more important if the estate tax is repealed.
• It will still be necessary to consider estate tax planning in states (such as New York, Connecticut and Massachusetts) which continue to have an estate tax.

If you have a taxable estate, it is important to remember, it is your estate that one day will pass on as directed by you. The burden is and has been on you to determine whether estate tax planning is implemented to maximize the passage of your assets. Now more than ever, you should have your estate plan reviewed with a professional planner and continue to monitor and act, once changes are enacted to our tax laws.

Vincent J. Russo, JD, LLM in Taxation, CELA, CAP
Russo Law Group, P.C.
100 Quentin Roosevelt Blvd., Suite 102
Garden City, NY 11530
800-680-1717