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POTENTIAL REDUCTION IN FEDERAL GIFT, ESTATE AND GENERATION-SKIPPING TRANSFER TAX EXEMPTIONS
Rumors are circulating that the Joint Select Committee on Deficit Reduction (the "Super Committee") -- cut $1.2 trillion from the federal deficit over the coming decade -- will recommend a reduction in the federal gift, estate and generation-skipping transfer ("GST") tax exemptions when it releases its recommendations on November 23, 2011. The rumors suggest that the Super Committee will recommend that the current $5 million estate tax exemption and $5 million GST tax exemption, which are in place through 2012 under current law, be reduced to $3.5 million and, perhaps more significant, that the current $5 million gift tax exemption (also in place through 2012 under current law) be reduced to $1 million. Of immediate concern is the rumor that the Super Committee will recommend reducing the federal gift tax exemption to $1 million as of December 31, 2011, or, less likely, perhaps as early as the November 23 announcement date.
The rumors are unsubstantiated. In fact, reports from several Washington insiders indicate that the Super Committee is not focused on the gift, estate and GST tax exemptions and that any decision on this issue will not happen until 2012 or later. Still, the recent rumors may add urgency to any decision regarding the transfer of assets. From a planning perspective, the potential reduction of the federal gift tax exemption from $5 million to $1 million is a matter of significant concern.
What should you do?
We can only speculate as to what the Super Committee and Congress will do. We will continue to monitor developments. Although there appears to be no evidence to support the recent rumors, we are unable to rule out a reduction in the tax exemptions. For those who intend to use part or all of their $5 million gift tax exemption before the "sunset" of the current legislation at the end of 2012 (when, absent new legislation, the gift tax exemption will return to $1 million), the prudent course may be to make those transfers now. Of course, there is state gift tax in some jurisdictions to consider, as well. There is also the risk that any reduction in the gift tax exemption would be retroactive to a date prior to the rumors, in which case a large gift now could attract an unexpected gift tax. Individual circumstances need to be considered in any analysis of transfer planning, and we are available to discuss your options in view of your prior gifts, your current objectives, and the obscure legislative landscape.
On March 12, Dina Kapur Sanna, an International Trusts and Estates Partner at Day Pitney, was a speaker at the American College of Trust and Estate Counsel (ACTEC) 2022 Annual Meeting in San Diego, CA, where she presented "Tricks and Tips on Navigating the Choppy Waters of International Estate/Succession Planning.
Day Pitney Counsel Susan A. Robb presented a webinar titled, "Introduction to Irrevocable Trusts," for the Boston Bar Administration's Trusts & Estates Fundamentals Committee on January 6.
On August 2, Day Pitney Counsel Heidi A. Seely presented at "Estate Planning: MCLE BasicsPLUS, Initial Steps, Fundamentals and Estate Planning Documents," hosted by MCLE.
Partner Dina Kapur Sanna spoke at the Private Client TransTrusts Bermuda event on a panel titled, “Impact of regulation, Economic Substance, Beneficial Owner Registers, FATCA, CRS across jurisdictions,” on June 4.
On May 3, Tiana Gianopulos delivered a presentation at the monthly meeting of the Connecticut Bar Association's Estates and Probate Section entitled, "Directed Trusts: Beyond the Basics."
Trusts and Estates Attorneys Joshua Caswell and Leiha Macauley testified on November 16 before the Massachusetts Legislature's Joint Committee on the Judiciary.
New York Partner Dina Kapur Sanna from our firm's Individual Clients department has been recognized on Citywealth's Top 100 Private Lawyers 2021 List.
Day Pitney Press Release
Day Pitney's merger with Rhode Island-based Howland Evangelista Kohlenberg, which was completed on July 1, was featured in the Connecticut Law Tribune.
The completion of the merger between Day Pitney and Howland Evangelista Kohlenberg was featured in South Florida Business & Wealth's article, "South Florida Law Firm Continues Expansion After Merging With Rhode Island Firm."
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