Much has been written and speculated about the fate of the Federal Gift, Estate and Generation Skipping Taxes under the current efforts of the Administration and of Republican Congressional leaders to overhaul Federal tax laws. The common view has been that the days are numbered for these wealth transfer taxes, commonly referred to as the “Death Tax”. However, it seems that this may not be the case.
The tax proposals of the Ways and Means Committee of the House of Representatives include provisions that would double the exemptions for each of the Federal Gift, Estate and Generation Skipping Taxes to $10,000,000 (indexed for inflation) for those who die after 2017; and, would repeal the Estate and Generation Skipping Taxes for those who die after 2023. In addition to keeping the Federal Estate and Generation Skipping Taxes for six more years, the House proposal keeps the Federal Gift Tax indefinitely, with a lowered tax rate of 35% (as compared to the current 40%).
Note, however that, although the plan issued by the Senate Finance Committee with regard to the Federal Gift, Estate and Generation Skipping Taxes is similar, there is the significant difference that it provides for no repeal of the Estate and Gift Taxes…after 2023 or otherwise.
Tax legislation, as is the case for all Federal legislation, needs to pass both the House of Representatives and the Senate, and then be signed by the President. Although Republicans represent a majority of both chambers, the margin in the Senate is particularly thin. It is becoming increasingly apparent that a full repeal of the “Death Tax” may not make it through the Senate. Of course, an increase in the exemptions to $10,000,000 (indexed for inflation) will make such Federal taxes of concern to only the most wealthy; yet, maybe surprisingly, a continuing concern.
For more information or if you have any questions about the New Jersey estate tax, please contact Judson M. Stein, Chair of the Trusts & Estates Practice Group, at 973-230-2080 or firstname.lastname@example.org or Lauren M. Ahern, Associate in the Trusts & Estates Practice Group.