Estate Planning

Estate Tax Claw Back - Don't Worry About It, Says AALU

By Greg Herman-Giddens

Since the enactment of TRA 2010 in December of last year, tax practitioners have been concerned that gifts made during 2011 and 2012 may, partially because of the way in which the current Federal Estate and Generation-Skipping Transfer Tax Return (Form 706) is worded, be subject to an estate tax for decedents dying in years after 2012 if the federal estate tax exemption is reduced at that time. This is generally referred to as the "claw back" scenario.

The February 2, 2011 AALU Bulletin article on this subject indicates that taxpayers should not hesitate to take advantage of the $5 million gift and generation-skipping transfer tax exemptions available this year and next and should not be concerned that such gifts will be subject to a claw back in later years:

"What is reasonably clear is that Congress did not intend that gifts made during 2011 and 2012 would be subject to an additional estate tax in 2013 and thereafter.  Furthermore, it is likely that some type of administrative or legislative relief will be forthcoming assuming that an unintended 'glitch' does exist.  This relief may be as simple as revising the Form 706."

Full post as published by North Carolina Estate Planning Blog on February 04, 2011 (boomark / email).