Although the recent amendment to H.R. 4853 appears to be dead on arrival in the Senate, this bill, as introduced by Montana Senator Max Baucus on December 2, 2010, did provide some insight as to where transfer tax laws might end up. Following is a quick summary of the bill’s points:
Use of 2009 Rates & Exemptions. The bill would have reinstated the 2009 estate, gift and GST tax law, with an estate exemption of $3.5 million, indexed for inflation beginning in 2011. The top estate, gift and GST tax rate would have been 45%.
Unification of Exemptions. The estate tax and gift tax exemptions would have become unified at $3.5 million, beginning in 2011.
Portability Would have been Available. The bill would have allowed the executor of a deceased spouse’s estate to transfer any unused estate tax exemption to the decedent’s surviving spouse.
Special 2010 Dispensation for GST Transfers. GST transfers made in 2010 (before the date of the bill’s introduction) would have been taxed at a zero GST tax rate.
Farmland Deferral. Estate tax payments on farmland would have been deferrable until such farmland was sold or transferred outside the family, or until it was no longer used for farming purposes.
Changes to GRAT Law. This bill would have provided that (1) GRATs would have a required minimum ten-year term; (2) that the annuity amount could not decrease in any year; and (3) that the remainder interest would need to have a value greater than zero as determined at the time of the transfer to the GRAT.
-Attorney David M. Grant