Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

UTILIZING THE IRA CHARITABLE ROLLOVER

Federal legislation recently made permanent an individual taxpayer ability to make charitable contributions directly from his or her IRA. These contributions are made directly from the IRA to the public charity are not taxed as income to the taxpayer subject to the following requirements: (i) individual making the contribution must be at least 70 1/2 years of age on the date of the contribution; and (ii) contributions of up to $100,000 per individual per year (or $200,000 for married taxpayers filing a joint return ). Contributions in excess of the $100,000 ($200,000) amount are treated as taxed withdrawals which are then donated to charity. Individuals over age 70 1/2 with traditional IRAs or Roth IRAs will benefit the most if they (1) have already used (either directly or via carry-over) their entire charitable deduction allowed under Section 170 of the Internal Revenue Code during the taxable year; (2) want to make charitable contributions but do not itemize deductions; or (3) have income above the applicable threshold such that deductions under Section 170 of the Internal Revenue Code are not “dollar for dollar” deductions.

CT, NY AND NJ JOIN THE STATES WITH AN INCREASED ESTATE TAX EXEMPTION

You can now add Connecticut, New York and New Jersey to the growing list of states trying to keep its retiring residents from fleeing to states with a lower or no state estate tax bill at death. Effective April 1, 2017, New York state increased their exclusion amount, the amount of property that could pass free of any New York state estate tax, from $1.00 million to $5.25 million. On January 1, 2019, the New York state exclusion amount will increase again and equal the federal exemption amount. Not to be left behind, in the fall of 2017, the states of Connecticut and New Jersey also made significant changes to their state estate tax exemptions. In 2018, the Connecticut estate tax exemption amount will rise from $2 million per person to $2.60 million and will match the federal exemption amount on January 1, 2020. In New Jersey, retroactive to January 1, 2017, the New Jersey estate tax exemption rose from $675,000 per person to $2.00 million. The New Jersey estate tax will be eliminated entirely on January 1, 2018. It is important to note that the New Jersey inheritance tax, a tax levied on inheritances passing to siblings, nieces, nephews and other unrelated individuals, is not impacted by this change in the law. As a result, bequests to certain beneficiaries may still be subject to inheritance tax.