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NEW FEDERAL LAW EXPANDS ABILITY TO ESTABLISH SPECIAL NEEDS TRUSTS

President Obama signed the 21 st Century Cures Act (H.R. 34) (the "Act") into law on December 13, 2016 following passage in the House of Representatives on November 30, 2016 and the Senate ...
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IRS RELEASES 2017 EXEMPTION RATES

On October 25, 2016, the IRS released Rev. Proc. 2016-55, which sets forth the effect of inflation on certain tax items in 2017, including exemption and exclusion amounts for estate, gift and ...
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PENNSYLVANIA IMPLEMENTS TAX AMNESTY PROGRAM

Delinquent Pennsylvania taxpayers may have the chance to obtain relief from interest and penalties on unpaid taxes. As a part of the recently enacted budget package, the Pennsylvania legislature has ...
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NEW REGULATIONS HIGHLIGHT POTENTIAL FOR IMPACT INVESTING THROUGH PRIVATE FOUNDATIONS

One of the attractive aspects of creating a private foundation as a vehicle for advancing an individual or family's charitable goals is the flexibility with which the trustees and directors of a ...
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PENNSYLVANIA ABLE ACT IS NOW LAW

The federal Achieving a Better Life Experience Act of 2014, known as the “ABLE Act,” creates a new section of the Internal Revenue Code, 529A, which authorizes Qualified ABLE Programs ...
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CHOOSING A BUSINESS ENTITY

Choice of entity is a key component in starting any new business enterprise. Attorneys who represent small business owners often steer their clients away from forming C corporations because of the ...
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IRA CHARITABLE ROLLOVER MADE PERMANENT

On December 18, 2015, President Obama signed into law the “Protecting Americans from Tax Hikes Act of 2015” (the “PATH Act”). Included in the PATH Act is a permanent extension ...
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RECENT CASE ILLUSTRATES IMPORTANCE OF PRECISE TAX CLAUSES

The allocation of death taxes, while often overlooked in estate planning, can have significant effects on the distribution of a decedent's estate. A recent decision by the Superior Court of ...
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IRS RELEASES 2016 EXEMPTION RATES

On October 21, 2015, the IRS released Rev. Proc. 2015-53, which sets forth the effect of inflation on certain tax items in 2016, including exemption and exclusion amounts for estate, gift and ...
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IRS RELEASES 2016 EXEMPTION RATES

On October 21, 2015, the IRS released Rev. Proc. 2015-53, which sets forth the effect of inflation on certain tax items in 2016, including exemption and exclusion amounts for estate, gift and generation-skipping transfer (“GST”) tax. A copy of Rev. Proc. 2015-53 can be found here: https://www.irs.gov/pub/irs-drop/rp-15-53.pdf.

In 2016, the federal estate/gift tax exemption amount will increase by $20,000 to $5,450,000 (in 2015 this amount was $5,430,000), reduced by prior gift tax exemption used. The generation-skipping transfer (“GST”) tax exemption amount also increased to $5,435,000 (in 2015, this amount was also $5,430,000), reduced by prior GST tax exemption used. These exemption amounts are indexed for inflation annually going forward, and therefore will presumably increase in future years. The tax on assets in excess of the exemption amounts is currently 40%.

In addition, each individual has an “annual exclusion” amount that he or she can give away to each person per year without using any of his or her gift tax exemption (certain requirements must be met for the gift to qualify for the annual exclusion). The annual exclusion amount is indexed for inflation annually. The annual exclusion amount in 2016 continues at $14,000 per person (or $28,000 per person if the donor is married and the couple elects to “split” gifts), the same amount as it was for the past three years.

In 2016, the annual exclusion from tax on a gift to a spouse who is not a United States citizen increased by $1,000 to $148,000 (the 2015 exclusion amount in 2015 was $147,000). Gifts to a spouse who is a United States citizen remain completely deductible for gift tax purposes.

As always, payments of tuition and medical expenses made directly to the education or health care provider do not require the use of your annual exclusion amount or your gift tax exemption.

If you are interested in learning about possible gifting opportunities, or if you want to discuss how the increased exemption amounts may impact your own estate planning, please contact your HTT&S lawyer.