Gift Tax Annual Exclusion Proposal

The Treasury Department has released a new proposal in the Green Book to limit the use of the gift tax annual exclusion for gifts to trusts.

Gifts of $14,000 per person, per year can currently be made in trust through the use of a “Crummey” withdrawal power.  These powers are often used to make gifts to irrevocable life insurance trusts.

The Green Book proposal imposes an annual limit of $50,000 per donor on the donor’s transfers of property, making transfers in excess of $50,000 in a single year taxable even if total gifts to each individual donee doesn’t exceed $14,000.

See Farhad Aghdami, Obama Administration Announces Gift Tax Exclusion Proposal, JD Supra Business Advisor, March 7, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.