The power point attached lays out the estate tax thresholds for Federal and New York as of today, March 25,20201.  It discusses Biden’s campaign proposal and pending Bills in New York State, which propose to tax New York recipients of inheritances and gifts, while keeping the estate tax, as well as others related Bills as of the date of this post.

In addition, it lays out the history of formula assignment clauses when gifting hard to value assets, like a business, to prevent running into trouble.  The power point discusses cases going back to 1944 which demonstrate the right and wrong way to do this.

With possibility of the estate and gift tax exemption being reduced planning should consider how to lock in the current exemption, one of which is to make large gifts.  There are many things to consider when making large gifts, i.e. income tax impact, the need to live on the asset transferred, is the beneficiary a “safe beneficiary” to transfer to, among many others.  There is also the concern that the value you report for the gift is later determined by the IRS,  or a court, to be higher and you now have to pay a large unexpected tax together with a penalty.  Using “Formula Assignment Clauses” properly can avoid this unexpected tax pitfall.  The slides are intended to show how to do this, but are intended to review the current status of the law and educate you as to the technique and issues.  You should always use a qualified professional when implementing these techniques.

Click here for the power point:SCBA 3.2021 Tax Program.