Читать книгу 2012 Estate Planning - Martin Inc. Shenkman - Страница 13

Many states have their own estate tax and about 20 states have disconnected from the federal estate tax system. Many of these state estate tax regimes have lower exemption amounts than the current 2012 $5.12 million federal exemption amount. These states are said to have “decoupled” their estate tax from the federal estate tax system. Planning to minimize state death tax for taxpayers domiciled in these decoupled states is more important for many taxpayers than the federal estate tax (which under 2012 law may not apply because of the large federal exemption). Next year, 2013, could dramatically change that paradigm.

While those living in decoupled states may be aware of the tax impact of decoupling, most people are predominantly or solely focused on the federal estate tax. The fact that you would not face an estate tax on a federal level today does not mean that you cannot save hundreds of thousands of dollars, or more, in state estate tax with some basic gift planning. But this type of planning could be curtailed by a 2013 reduction in the gift exemption to $1 million. It is important to note that while most people seem to believe that the “exemption” will never be permitted to drop as low as $1 million (President Obama’s proposal was for a $3.5 million exemption), this does not assure that the gift tax exemption may not revert to its pre-2010 Tax Act level of $1 million.

Under current law, if you have a $5 million estate, are domiciled in a decoupled state with a $1 million exemption, you could gift $4 million and avoid all (or almost all depending on the calculation) state estate tax. This does, however, assume no state gift tax to be factored into the analysis which isn’t the case in Connecticut and Tennessee—the two states with such taxes. However, if the gift tax exemption reverts to $1 million, that gift will no longer be practical since you would have to pay a federal gift tax on the $3 million federal gift ($4 million gift less $1 million possible 2013 exemption). If the exemption remains unified (the same for gift, estate, and GST taxes) but is reduced to the $3.5 million proposed by President Obama, you could face a $225,000 gift tax [45% rate x ($4 million gift - $3.5 million exemption)] if the same gift were made in 2013. That could be an incredible payoff for an elderly or a terminally ill person to make. However, see the discussions that follow concerning income tax basis. The decision whether to proceed is not simple.

PLANNING NOTE: For many taxpayers, the 2010 Act made the state estate tax the only estate tax they need to consider. The calculus for these people became such that more traditional planning steps, such as transfers to irrevocable trusts, became impractical if evaluated in the vacuum of only the state estate tax sting. For some of these taxpayers, the focus of planning shifted to a change of their domicile from a high estate tax state (e.g., New Jersey) to a no estate tax state (e.g., Florida). Some of these purported changes in domicile were questionable at best as ties with the home state were insufficiently severed to break domicile. If, in fact, the federal exemption declines sufficiently in 2013, these taxpayers may again find themselves in the position of having to undertake more significant estate tax minimization planning to avoid both a federal and state estate tax. However, if many of the planning techniques now available are restricted or curtailed, this may be more difficult to accomplish. Taxpayers who fall in this under $5 million category living in decoupled states should consider the benefits of planning in 2012.