There are recent developments affecting trust and estate planning that may be of interest.

Delay in regulations restricting valuation discounts.

The IRS has proposed to prohibit the use of certain discounts when valuing interests in family-controlled properties and interests.  Recently, the IRS delayed the final regulations.  This estate-planning tool remains available for the time being.

Federal tax reform likely in 2017.

With a new President and Congress taking office in January 2017, new tax legislation will likely be soon proposed.  The new President and Congressional Republicans favor repeal of the federal estate tax.  The exemption from the federal estate and gift tax will be $5,490,000 per individual ($10,980,000 per married couple) in 2017.  Unless and until there is a repeal, persons of sizable estates need to plan to take advantage of the exemption.

The new President’s tax plan would reduce the top marginal income tax rate substantially, while disallowing certain itemized deductions, including charitable deductions above a certain level of income (e.g., $200,000 for married couples and $100,000 for single taxpayers).  Persons may want to consider accelerating charitable gifts into 2016 where possible.

2017 adjustments to certain federal tax exclusions have been announced.

As noted, the federal estate tax exemptions for 2017 have been set.  The generation-skipping tax exemption will be the same as for the estate tax.  The federal gift tax annual exclusion amount will remain at $14,000 per don e (or $28,000 for a married couple making a split gift).

We encourage the clients of our law practice to stay up-to-date on the ever-changing landscape of taxes and planning.  If you need assistance with your estate plan, please don’t hesitate to contact us at 931-398-5200 or [email protected].

(Acknowledgment, for ideas in this post, is given to the firm of Patterson Belknap Webb & Tyler LLP of New York City.)