MKA Executive Planners Blog

The Obama Administration recently released its federal budget for fiscal year 2016 proposing several tax law changes, which, if enacted, could significantly increase your federal income, capital gains and/or estate tax exposure. Although Congress may not take action on these proposals, they may provide some insight into potential areas of consideration for future tax reform legislation. Some of the more notable proposals include:

Many foreign individuals choose to invest in the United States for a variety of good reasons such as to provide for family living here, to purchase a second home, or to take advantage of the relative security of the U.S. economic system.  Those non-citizens, whether they are classified as “non-resident aliens” or “resident aliens,” face a complex set of rules based on tax codes and international treaties for income and wealth transfers.

For 2012, the federal exemption from all three transfer taxes is $5,120,000 ($10,240,000 for married couples).  The gift and estate tax exemptions are each scheduled to revert to $1,000,000, and the generation skipping transfer tax exemption (GST) is scheduled to revert to $1,390,000 on January 1, 2013.  No one really expects a complete reversion, but it is highly unlikely that that all three types of transfer taxes will be sustained at the current, historically high, levels.  Here are a few reasons why a great deal of wealth will be transferred between January 1 and December 31, 2012, in variety of ways.