Major Family Gifting Faces Headwind if Obama’s Budget Proposal Passes

On February 13th, the Obama Administration released its fiscal year 2013 budget, including various estate tax proposals that, starting in 2013, would result in:

1. Reducing the lifetime gift exemption back to $1M (the 2009 level)
2. Reducing the overall estate tax exemption to $3.5M (the 2009 level)
3. Increasing the top estate tax rate back to 45% (the 2009 level)
4. Making the trust assets in the IDGTs (Intentionally Defective Grantor Trusts) includible in the grantor’s estate
5. Modifying the rules on valuation discounts
6. Requiring a minimum 10-year term on GRATs (Grantor Retained Annuity Trusts)
7. Making permanent the portability (carryover) of unused estate tax exemption amounts between spouses.
8. Limiting the duration of the GST exemption to 90 years

Among the Administration’s various proposals on estate tax law changes, the most damaging one is the proposed reduction of the Continue reading »