The new tax laws doubling the exemption from federal estate, gift and generation-skipping transfer tax to $11.18 MM per person presents planning opportunities, including potentially forgiving outstanding intrafamily debt. Are you affected but uncertain what to do? Let’s talk! Contact us.
“The new tax law, which took effect on Jan. 1, 2018, doubled the exemptions from federal estate, gift and generation-skipping transfer tax to $11.18 million per individual, with inflation adjustments going forward and a reversion to the base $5 million exemption (with inflation adjustment) on Jan. 1, 2026. This temporary [sic] increased exemption presents a number of planning opportunities, one of which is to forgive outstanding intrafamily debt.
One by-product of the historically low interest rate environment of the past several years is the increased use of intrafamily transactions involving promissory notes. These notes play a key role in many estate planning transactions, and their prevalence has made them a worthy target for the Internal Revenue Service. For certain clients, using the temporarily increased exemption amount to forgive these notes now could both eliminate a number of potential headaches down the line and open up some interesting new planning avenues.”