In 2021, we rode a rollercoaster of proposed changes to the tax laws. None of those proposals ultimately became law, but there are a variety of laws that are already on the books that were changed as of January 1.  These changes include increases to the lifetime exclusion amount, the annual exclusion amount and decreases to the required minimum distributions from individual retirement accounts.  Please read more about all of those changed below.
Annual Inflation Adjustments Increase Several Key Tax Exclusions While New Mortality Tables Decrease IRA Distributions
Capital Hill
As you consider your estate planning options for 2022, please be aware of some important federal tax updates. These updates include changes to the lifetime exemption amount, the annual exclusion amount and required minimum distributions from individual retirement accounts. Despite the flurry of legislative proposals in 2021, no changes have been made to the applicable federal tax rates for estates and trusts, federal estate tax portability, and step-up in basis.  


1. Lifetime Exemption. As of January 1, 2022, based on the 2022 inflation adjustments, the federal gift and estate tax exemption amount and the exemption from generation-skipping transfer (GST) tax have increased from $11,700,000 to $12,060,000 ($24,120,000 for a married couple).
2. Annual Exclusion. As of January 1, 2022, also based on inflation adjustments, the federal gift tax annual exclusion amount increased from $15,000 to $16,000 ($32,000 for a married couple). The annual exclusion is the amount that an individual can annually transfer to another individual without using any lifetime gift tax exclusion or paying any gift tax. 
3. Required Minimum Distributions. As of January 1, 2022, there are new life expectancy tables for determining required minimum distributions (RMDs) from IRAs and qualified retirement plans. These updates affect beneficiaries of inherited IRAs or qualified retirement plans, traditional IRA (non-Roth) owners who have reached their Required Beginning Date for taking RMDs, and qualified retirement plan participants who have reached their Required Beginning Date for taking RMDs.  


1. Applicable Federal Tax Rates for Estates and Trusts. The highest federal estate tax, gift tax, and GST tax rate remains at 40%. The highest federal income tax rate for estates and non-grantor trusts is 37%, which applies to taxable income over $13,450 earned by an estate or non-grantor trust during its administration. Note that estates and non-grantor trusts are also subject to the 3.8% tax on net investment income. 
2. Federal Estate Tax Portability. The option remains to transfer a decedent’s unused federal estate tax exclusion amount to a decedent’s surviving spouse by filing a federal estate tax return. 
3. Step-Up in Basis. Generally, the income tax basis of property acquired from a decedent is adjusted to the fair market value of that property as of the date of the decedent’s death.

This update is intended to provide a brief summary of federal tax changes for 2022. If you have any questions, please consult with one of our attorneys.
Congratulations to Justin M. Savioli
Katz Baskies & Wolf is pleased to announce that Justin M. Savioli has become a partner in the Firm. Justin has been associated with the firm since 2008, and he is a critical part of all that the Firm does. In addition to his work in the areas of estate planning and business law, Justin also oversees our probate and real estate departments. Justin is a graduate of the University of Miami, the University of Miami School of Law and holds a Master of Laws degree in Taxation (an LLM) from the University of Florida. Please join us in congratulating Justin.  You can learn more about Justin here.
Hot Topics in Estate Planning
Jeff Baskies
On February 4, 2022, Jeff Baskies and Paul Lee (attorney and national tax strategist with Northern Trust in New York City) presented a 2 hour seminar entitled “Hot Topics in Estate Planning: Finding Gems in the Dumpster Fire” at the 9th annual Florida Tax Institute in Tampa. The presentation addressed planning opportunities for clients taking advantage of these times of tax uncertainty – with many important potentially expiring tax provisions along with many potentially changing “permanent” tax laws. The goal of the seminar was to offer planning solutions for tax attorneys trying to anticipate changes in the law while creating efficacious estate plans.   Thus, the program focused on how clients may plan while retaining flexibility, control and access. The Florida Tax Institute is a tax program developed in connection with the University of Florida’s Levin College of Law designed for practicing tax professionals. The Institute was held over 3 days (February 2-4, 2022) and had over 300 attendees this year. 
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