Important Changes to Tennessee Gift and Inheritance Tax Laws
On May 21, 2012, Tennessee Governor Bill Haslam signed into law important legislation pertaining to estate planning. The new law repeals the Tennessee gift tax and phases out the Tennessee inheritance tax.
The repeal of the Tennessee gift tax is effective retroactively to January 1, 2012. The Tennessee inheritance tax is phased out by increasing the exemptions over the next three years as follows until fully repealed in 2016:
2016 No inheritance tax
The repeal of the Tennessee gift tax creates a unique opportunity in 2012 for high net worth Tennessee residents to transfer assets and avoid paying gift taxes. In 2012, the federal gift tax exemption is a rather high $5,120,000. In 2013, however, the federal gift tax exemption drops down to only $1,000,000. There are, of course, other considerations that must be taken into account in making this decision, such as the step up in basis that a beneficiary receives when property passes at the death of the owner; but under the right circumstances this estate planning tool could literally save a family hundreds of thousands of dollars in taxes in the long run.
It is no secret that the Estate tax laws have been in a constant state of flux in the last few years, with no end in sight. If you do not have an estate plan, or it has been several years since you revisited it, now is the time to do something about it. At the Waterford Law Group we are committed to preserving you and your family’s legacy. Implementing an estate and gift tax strategy is just one of the many tools we use to do just that. Give us a call and allow us to preserve your legacy.