what’s trending on np trusts & estates

This newsletter is intended as an information source for the clients and friends of Nixon Peabody LLP. The content should not be construed as legal advice, and readers should not act upon information in the publication without professional counsel. This material may be considered advertising under certain rules of professional conduct. Copyright © 2016 Nixon Peabody LLP. All rights reserved.

What’s trending on NP Trusts & Estates

Tax related numbers for 2016-2017, CME Group launches Bitcoin reference rate and real time

index, 2017 individual tax filing deadlines, income tax rates and filing thresholds, estate and gift tax

exclusion amounts, and more. Here’s what’s trending in estate planning and wealth management.

Wealth Management

First Bitcoin Index and Reference Rate launched

Bitcoin appeared in 2008 in the aftermath of the financial crisis as a new form of electronic

money or “cryptocurrency.” Bitcoin’s connection to criminal activity and the “darknet

markets” has cast it in an unfavorable light with government officials, law enforcement

and the media, but its explosive growth over the past eight years has caught the attention

of serious investors and financial institutions.

In a move that will help legitimize bitcoin’s use as a financial asset, the CME (Chicago

Mercantile Exchange) Group has launched its CME CF Bitcoin Reference Rate (BRR) and

CME CF Bitcoin Real Time Index (BRTI) on November 13. Although other bitcoin price

indexes exist, this will mark the first time a large exchange has implemented such a

measure.

Several leading bitcoin exchanges and trading platforms will provide real-time pricing data

to CME. The BRR combines the trade flow of these exchanges throughout the day and

calculates a daily reference rate for the U.S. dollar price of one bitcoin (Click here to view

the current BRR for one bitcoin). Meanwhile, the BRTI will reflect aggregate global buy

and sell demand into a consolidated order book that will reflect the current price of one

bitcoin in U.S. dollars. According to CME, these two numbers will be standardized and

spot checked with independent oversight, and will be used to quicken the authentication

of “digital assets” as a new asset class.

What does this mean for investors? They will most likely see futures and options based on

the bitcoin index and new ETFs for digital currencies in the near future, as well as new

January 4, 2017

innovations for worldwide trade and lower costs due to a single, uniform currency whose

price is visible to all. There are many potential advantages for digital currencies, and those

who participate will be in the best position to gain from their promising future.

— Thomas A. Stedman

Income Tax Planning

Individual income, gift and estate tax related numbers for 2016-2017

The following list contains some of the "number" changes (many based on mandated

inflation adjustments) that you might find interesting and helpful for 2017 tax and estate

planning *(with 2016 comparative numbers).

Federal Income Tax Items 2016 2017

Top federal marginal tax rate for ordinary income

(applicable for taxable income over $466,950 joint

and $415,050 single in 2016 and $470,700 joint and

$418,400 single in 2017); lower tax brackets are 10%,

15%, 25%, 28%, 33% and 35% in 2016 and 2017

39.6% 39.6%

Federal tax rate for long-term capital gains (assets

held for more than one year) and qualified dividends

for individuals in the 10% and 15% tax brackets

(taxable income of up to $75,300 joint and $37,650

single in 2016 and $75,900 joint and $37,950 single in

2017)

0% 0%



for individuals in the 25%, 28%, 33% and 35% brackets

(taxable income between $75,300 and $466,950 joint

and $37,650 and $415,050 single in 2016 and between

$75,900 and $470,700 joint and $37,950 and $418,400

single in 2017)

15% 15%



for individuals in the 39.6% bracket (taxable income

over $466,950 joint and $415,050 single in 2016 and

20% 20%

$470,700 joint and $418,400 single in 2017)

Federal tax rate on the portion of long-term gain

from real estate that represents depreciation

recapture (so-called “Section 1250 gain”)

25% 25%

Federal tax rate on long-term gain from collectibles

(e.g., art, antiques, precious metals, gems, stamps,

coins, etc.)

28% 28%

Federal tax rate on long-term gain on small business

stock eligible for the 50% exclusion

28% 28%

Standard deduction

Married filing jointly $12,600 $12,700

Head of household $9,300 $9,350

Single or married filing separate returns $6,300 $6,350

Additional amount for over 65 or blind


Single $1,550 $1,550

Net unearned income of children under age 19 and

dependent full-time students under age 24 that

escapes the “kiddie” tax (child taxed at parent’s

marginal rate)

$2,100 $2,100

“Kiddie tax” standard deduction $1,050 $1,050

Personal exemption amount (subject to “phase out,”

as noted below)

$4,050 $4,050

Range of Adjusted Gross Income (AGI) where the

personal exemption “phases out”

Married filing jointly $311,300–

$433,800

$313,800–

$436,300

Head of household $285,350– $287,650–

$407,850 $410,150

Single $259,400–

$381,900

$261,500–

$384,000

Married filing separately $155,650–

$216,900

$156,900–

$218,150

Applicable amount of AGI after which itemized

deductions are reduced by 3% of AGI over this

applicable amount—the “Pease Limitation”


Head of household $285,350 $287,650

Single $259,400 $261,500

Married filing separately $155,650 $156,900

Taxable wage base for Social Security and self-

employment income

$118,500 $127,200

Social Security COLA (cost of living adjustment) 0.0% 0.3%

Additional Medicare tax on wages and self-

employment income when wages and self-

employment income exceed the following

thresholds:

Married filing jointly—$250,000 0.9% 0.9%

Married filing separately—$125,000

Single/Head of household—$200,000

Medicare surtax on investment income when

Modified Adjusted Gross Income (MAGI) (which is

AGI plus foreign earned income) exceeds the

following thresholds:

Married filing jointly—$250,000 3.8% 3.8%

Married filing separately—$125,000

Single/Head of household—$200,000

Tax is assessed on the smaller of the filer’s net

investment income or the excess of MAGI over the

applicable threshold amount

Maximum alternative minimum tax (AMT) rate on

AMT income over $186,300 in 2016 and $187,800 in

2017; below these amounts, the AMT rate is 26%

28% 28%

Alternative minimum tax (AMT) exemption:


Single $53,900 $54,300

Married filing separately $41,900 $42,250

Range of AMT taxable income where the AMT

exemption “phases out”


$494,900

$160,900–

$498,900

Single $119,700–

$335,300

$120,700–

$337,900

Married filing separately $79,850–

$247,450

$80,450–

$249,450

Health Savings Account (HSA) annual contribution:

Family $6,750 $6,750

Single $3,350 $3,400

Additional “catch-up” contributions for individuals

aged 55 or older

$1,000 $1,000

Maximum traditional and Roth IRA contributions $5,500 $5,500

Additional “catch-up” contributions for individuals

aged 50 or older $1,000 $1,000

AGI phase-out range for Roth IRA contributions


$194,000

$186,000–

$196,000

Single/Head of household $117,000–

$132,000

$118,000–

$133,000

Maximum elective deferrals for 401(k) plans, 403(b)

plans, governmental 457 plans and SARSEPs

$18,000 $18,000

Additional catch-up contributions for above plans for

those aged 50 or older

$6,000 $6,000

Maximum deferral for SIMPLE plans $12,500 $12,500

Additional catch-up contributions for SIMPLE plans

for those aged 50 or older

$3,000 $3,000

Maximum deferral for non-governmental 457 plans

(catch-up contribution is not allowed)

$18,000 $18,000

Maximum compensation limit for defined

contribution retirement plan purposes

$265,000 $270,000

Maximum contribution limit for defined

contribution plans

$53,000 $54,000

Defined benefit plan limit $210,000 $215,000

Maximum Qualified Charitable Distribution (QCD,

or a taxable distribution from an IRA owned by an

individual over 70 ½ that is paid directly from the IRA

to a qualified charity. QCD amount may be excluded

from income and also may be used to satisfy the

Required Minimum Distribution amount. QCD is not

taken into account in determining any deduction for

charitable contributions)

$100,000 $100,000

Maximum foreign earned income exclusion $101,300 $102,100

Business mileage rate (per mile) $0.54 $0.535

Charitable mileage rate (per mile) $0.14 $0.14

Medical and moving mileage rate (per mile) $0.19 $0.17

AGI threshold for deducting qualified medical

expenses

Under age 65 10% 10%

Over age 65 7.5% 10%

Estimated tax payments and withholding required to

avoid penalties:

Percentage of current year tax liability or 90% 90%

Percentage of prior year tax liability:

if AGI is $150,000 or less 100% 100%

if AGI is greater than $150,000 110% 110%

“General” IRS interest rate on overpayments and

underpayments

1st Q–3% 1st Q–4%

2nd Q–4% 2nd Q–TBD

3rd Q–4% 3rd Q–TBD

4th Q–4% 4th Q–TBD

Amount of compensation that triggers withholding

and FICA responsibility for domestic employees

(“nanny tax”)

$2,000 $2,000

Maximum amount of business equipment that can be

immediately expensed under Section 179 (rather than

capitalized and depreciated)

$500,000 $510,000

Maximum amount of additional first-year

depreciation (“Bonus Depreciation") applied to the

adjusted basis of qualified property

50% 50%

Medicare Part B monthly premium—premiums will

be based on modified adjusted gross income as

follows:

Less than or equal to $85,000 (single) or $170,000

(joint)—monthly premium

$121.80 $134.00

$85,001–$107,000 (single) or $170,001–$214,000


$170.50 $187.50

$107,00–$160,000 (single) or $214,001–$320,000


$243.60 $267.90

$160,001–$214,000 (single) or $320,001–$428,000


$316.70 $348.30

More than $214,000 (single) or greater than $428,000


$389.80 $428.60

Federal Transfer Tax Items 2016 2017

Top estate tax rate 40% 40%

Top gift tax rate 40% 40%

Top generation-skipping tax (GST) rate for transfers

after 12/31/12

40% 40%

Annual gift tax exclusion per donee $14,000 $14,000

Applicable lifetime gift tax exemption $5,450,000 $5,490,000

Applicable estate tax exemption $5,450,000 $5,490,000

The exemption amount does not reflect “Portability,”

which is the ability of a surviving spouse to utilize the

unused estate exemption of a spouse who died in or

after 2011.

Applicable generation-skipping tax (GST) exemption $5,450,000 $5,490,000

Transfers to a spouse during life or at death (U.S.

citizens)

Unlimited Unlimited

Annual gift tax exclusion for transfer to non-citizen

spouse

$148,000 $149,000

Reporting threshold for gifts received from foreign

corporations and partnerships

$15,671 $15,797

Reporting threshold for gifts received from non-

resident aliens and foreign estates

$100,000 $100,000

California Tax Items 2016 2017

Top California marginal income tax rate for filers

with taxable income of $1,000,000 or more. A 12.3%

rate applies to filers with taxable income below

$999,999.

13.3% 13.3%

Top California estate tax rate—due to the repeal of

the federal state death tax credit, there is no

California estate tax.

N/A N/A

Top California gift tax rate—there is no state gift tax. N/A N/A

Florida Tax Items 2016 2017

Top Florida marginal income tax rate N/A N/A

Top intangible tax rate (per value of intangible assets

owned on January 1). The tax was repealed effective

January 1, 2007.

N/A N/A

Top Florida estate tax rate—due to the repeal of the

federal state death tax credit, there is no Florida estate

tax.

N/A N/A

Top Florida gift tax rate—there is no state gift tax. N/A N/A

Illinois Tax Items 2016 2017

Top Illinois marginal income tax rate 3.75% 3.75%

Top Illinois estate tax rate (designed to absorb the 16% 16%

state death tax credit allowed under federal law before

the 2001 tax legislation); the effective rate could be as

high as 28.5%.

Estate tax exemption (lower than the federal

exemption)

$4,000,000 $4,000,000

Top Illinois gift tax rate—there is no state gift tax. N/A N/A

Maryland Tax Items 2016 2017

Top Maryland marginal income tax rate 5.75% 5.75%

Top local income tax rate (Baltimore City and

counties of Howard, Wicomico, Montgomery, Queen

Anne’s and Prince George’s)

3.2% 3.2%

Top Maryland estate tax rate (designed to absorb the

state death tax credit allowed under federal law before

the 2001 tax legislation)

16% 16%

Estate tax exemption (lower than the federal

exemption); will increase annually to equal the

federal exemption in 2019.

$2,000,000 $2,000,000

Top Maryland gift tax rate—there is no state gift tax. N/A N/A

Massachusetts Tax Items 2016 2017

Massachusetts income tax rates:

Parts A, B and C income (excluding short-term gains)

and collectibles

5.10% 5.10%

Part A income—net short-term gain and gain on all

collectibles

12% 12%

Top Massachusetts estate tax rate (designed to absorb

the state death tax credit under federal law before the

16% 16%

2001 tax legislation)

Estate tax exemption (Note: lower than the federal

exemption)

$1,000,000 $1,000,000

Top Massachusetts gift tax rate—there is no state gift

tax.

N/A N/A

New Hampshire Tax Items 2016 2017

Interest and dividend income tax rate for residents 5% 5%

Top marginal income tax rate on other income N/A N/A

Top New Hampshire estate tax rate—due to the

repeal of the federal state death tax credit, there is no

New Hampshire estate tax.

N/A N/A

Top New Hampshire gift tax rate—there is no state

gift tax.

N/A N/A

New York State Tax Items 2016 2017

Top New York State marginal income tax rate for

filers with taxable income in excess of $2,140,900

8.82% 8.82%

Top New York City marginal income tax rate 3.876% 3.876%

Top New York estate tax rate on taxable estates over

$10,100,000 (with effective rates over 100% on the

initial amounts over 105% of the basic exclusion

amount).

16% 16%

Estate tax applicable exclusion amount. An applicable

credit is allowed against the New York estate tax. For

taxable estates less than the applicable exclusion

amount, no tax payable. For taxable estates between

100% and 105% of the basic exclusion amount, credit

is phased out. No credit if taxable estate is over 105%

$4,187,500

(04/01/16–

03/31/17)

$5,250,000

(04/01/17–

12/31/18)

of the basic exclusion amount.

Top New York gift tax rate—there is no state gift tax,

although gifts made between April 1, 2014, and

January 1, 2019, will be subject to an estate inclusion

if made within three years of death.

N/A N/A

Rhode Island Tax Items 2016 2017

Top Rhode Island marginal income tax rate 5.99% 5.99%

Top Rhode Island estate tax rate (designed to absorb

the state death tax credit allowed under federal law

before the 2001 tax legislation)

16% 16%

Estate tax exemption (Note: lower than the federal

exemption)

$1,500,000 $1,500,000

Top Rhode Island gift tax rate—there is no state gift

tax.

N/A N/A

Virginia Tax Items 2016 2017

Top Virginia marginal income tax rate 5.75% 5.75%

Top Virginia estate tax rate—due to the repeal of the

federal state death tax credit, there is no Virginia

estate tax.

N/A N/A

Top Virginia gift tax rate—there is no state gift tax. N/A N/A

— Deborah L. Anderson and Mary M. Paul, EA

2017 Federal tax filing deadlines for individuals

Mark your calendars with the 2017 federal individual tax filing deadlines. Missing a

deadline may result in the IRS assessing penalties and interest.

January 17 4th

quarter 2016 estimated

income tax payment

Form 1040-ES

April 18 Income tax return for 2016

(or request for an extension

of time to file)

Form 1040

(Form 4868 to extend

deadline)

April 18 1st quarter 2017 estimated

income tax payment

Form 1040-ES

April 18 Gift tax return for 2016


of time to file)

Form 709

(Form 8892 to extend

deadline; Form 8892 is not

required if you also file

Form 4868 to extend the

deadline for your income tax

return)

April 18

(new due date)

FBAR* for 2016


of time to file)

FinCEN Report 114

June 15 2nd


income tax payment

Form 1040-ES

September 15 3rd


income tax payment

Form 1040-ES

October 16 Extended income tax return

for 2016

Form 1040

October 16 Extended gift tax return for

2016

Form 709

* United States persons are required to file a Foreign Bank and Financial Account Report

(FBAR) if:

1. the United States person had a financial interest in or signature authority over at least

one financial account located outside of the United States; and

2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during

the calendar year reported.

A United States person includes U.S. citizens; U.S. residents; entities, including but not

limited to, corporations, partnerships, or limited liability companies, created or organized

in the United States or under the laws of the United States; and trusts or estates formed

under the laws of the United States.

— Mary-Benham B. Nygren

2017 Filing Thresholds and Rates

Even though you are working on your 2016 tax returns, the IRS has released the 2017 tax

rates. See the tables below based on your filing status.

Single Taxpayers

If Taxable Income is Between: The Tax Due Is:

0 – $9,325 10% of taxable income

$9,326 – $37,950 $932.50 + 15% of the amount over $9,325

$37,951 – $91,900 $5,226.25 + 25% of the amount over

$37,950


$91,900


$191,650


$416,700

$418,401 + $121,505.25 + 39.6% of the amount over

$418,400

Married Individuals Filing Joint Returns and Surviving Spouses



$18,651 – $75,900 $1,865 + 15% of the amount over $18,650


$75,900


$153,100


$233,350

$416,701 – $470,700 $112,728 + 35% of the amount over

$416,700

$470,701 + $131,628 + 39.6% of the amount over

$470,700

Heads of Household





$50,800


$131,200


$212,500


$416,700


$444,550

Married Filing Separately



$9,326 – $37,950 $932.50 + 15% of the amount over $9,325


$37,950

$ 76,551 – $116,675 $14,876.25 + 28% of the amount over

$76,550


$116,675



$235,350

The filing thresholds for 2017 will increase slightly from 2016. You are not required to file

a tax return if your filing status is Single and your gross income was less than $10,400,

Married filing jointly gross income less than $20,800, Married filing separately gross

income less than $4,050, Head of household gross income less than $13,400, and Surviving

spouses gross income less than $16,750. There are additional situations and age

requirements that may affect your filing obligation. You should contact your tax advisor to

discuss your situation.

— Kelly Acevedo

What documents do I need to prepare my income taxes?

April 18, 2017 is the due date for filing your 2016 tax return or 2016 extension. It’s not too

early to start gathering documents that you will need to provide to your tax preparer

during the first few months of 2017. Get yourself an empty, bright colored envelope or file

folder for paper documents and establish a “tax folder” on your computer for tax

documents received electronically.

Examples of information to gather in December:

Review your checkbook, credit card statements, receipts and bank transactions and

make a list of the following:

o Cash and non-cash charitable contributions

o Unreimbursed business expenses

o Daycare expenses

o Alimony paid or received

o Real estate taxes not paid out of escrow

o If paying quarterly taxes, amounts paid during the year

If applicable, obtain records relating to income and expenses for rental properties.

If self- employed, obtain records relating to income and expenses of your business.

If you purchased or sold your residence, obtain Form HUD-1 Settlement

Statement. For purchases or sales occurring after October 3, 2016, obtain your

Closing Disclosure Statement that replaces Form HUD-1.

If using a new tax preparer, obtain copies of your prior year tax return so it can be

used as a reference to your income and deductions to determine if anything is

missing for the current year.

Examples of information to gather in the first few months of 2017 that may be

received in the mail or electronically:

Forms W-2 and forms in the “1099” category. These forms will report any income

earned in 2016 (i.e. 1099-INT interest income, 1099-DIV dividends, 1099-R

Retirement Distributions, 1099-MISC rents, royalties, nonemployee compensation,

1099G government payments, tax refunds, unemployment compensation, 1099-B

sales of securities).

Form 1098 reporting the amount of mortgage interest paid in 2016.

Forms in the “1095” category documenting health coverage (i.e. 1095-A, 1095-B,

1095-C).

Forms in the “K-1” category reporting income and deductions from partnerships, S

corporations, Trusts, and Estates.

Forms related to education expenses and credits (Form 1098-T Tuition Payments

Statement, Form 1099-Q withdrawals from a 529 plan, Form 1098-E Student Loan

interest statement).

Be prepared! Assembling tax information is easier now when transactions are fresh in your

mind and documents are being received on a daily basis by mail or electronically. This will

eliminate lost documents and a last minute scramble for information.

— Alyson L. Stevenson

Is your ITIN expiring on January 1, 2017?

Individual Taxpayer Identification Numbers (ITINs) are obtained by those persons who

are not eligible for a Social Security Number (SSN) but are required to make a tax filing or

have a payment obligation under U.S. law.

The IRS recently added an expiration period for ITINs. The following ITINs will expire on

January 1, 2017:

•ITINs that have not been used on a tax filing in the last three years;

•ITINs with middle digits of either 78 or 79 (or 9NN-78-NNNN and 9NN-79-

NNNN).

If you have an ITIN set to expire, you should file for a renewal of your ITIN, using Form

W-7, as soon as possible. Any delay in your ability to use your ITIN on future tax filings

can cause refund delays and/or denial of tax benefits.

https://www.irs.gov/pub/irs-pdf/fw7.pdf

https://www.irs.gov/pub/irs-pdf/fw7.pdf

It is currently taking the IRS seven (7) weeks to process accurate ITIN renewals. The IRS,

however, anticipates that the time frame will expand to as much as eleven (11) weeks

during the January to April tax season.

— Christopher F. Caldwell

Estate and Gift Planning

Why create an irrevocable life insurance trust?

An irrevocable life insurance trust (ILIT) is used to remove the proceeds of a life insurance

policy from an individual’s estate for estate tax purposes. As its name indicates, an ILIT

may not be amended or revoked by the grantor of the trust, and it typically holds

insurance policies on the grantor’s life.

The ownership of the policy is transferred from the grantor to the name of the trust, and

the trust is then also named as the primary beneficiary of the policy. Upon the death of the

grantor, the death benefit is paid out to the trust and passes in accordance with its terms.

Since the ILIT is the legal owner of the policy, the proceeds are not included in the

measure of the grantor’s gross estate and are therefore not included for estate tax purposes.

For decedents with sizable estates that may otherwise be subject to a state or federal estate

tax, an ILIT is a useful planning vehicle to help transfer wealth and liquidity to lower

generations without the burden of estate tax.

It should be noted that upon the initial transfer of the policy to the trust (and also

subsequent additions made to the trust to pay insurance premiums) a portion of a

taxpayer’s lifetime exemption (currently $5.45M in 2016) may be utilized and the transfers

must be reported on a gift tax return. The transfers may also be subject to the generation-

skipping transfer (“GST”) tax and a lifetime GST exemption may be allocated to the trust.

— Julie M. Wood

What is a Dynasty Trust?

A Dynasty Trust is a type of irrevocable trust designed to last for a long time (potentially

forever) and is a valuable tool for wealthy individuals to benefit their families for

generations to come.

Traditionally, trusts were subject to the “rule against perpetuities,” which meant that

property could be held in trust only for a limited period of time usually determined by a

particular formula. Recently, however, many jurisdictions, including trust-friendly states

such as Delaware and New Hampshire, have abolished the rule against perpetuities

(meaning some trusts can last forever) or substantially lengthened the perpetuities period.

In order to take advantage of a Dynasty Trust, a trustee located in the desired state

(typically a bank or trust company) must be appointed.

One common structure is to hold the Dynasty Trust as a single “pot” for all of the grantor’s

descendants until his or her death. At the grantor’s death, the Dynasty Trust divides into

separate share trusts for each child of the grantor. At the death of each child, the trust is

further divided among each branch of the family, possibly in perpetuity. At the death of

each generation, assets continue to be held in further trust without the imposition of any

transfer tax. In addition to being extremely tax efficient, a Dynasty Trust should protect

beneficiaries from creditors, including divorcing spouses.

The usual Dynasty Trust is created using all or a portion of the grantor’s $5.45 million

exemption from federal gift and estate tax. The grantor also applies his or her exemption

from generation-skipping transfer (GST) tax so that distributions made to grandchildren

and more remote descendants are never subject to federal transfer tax. Many times the

Dynasty Trust is designed as a “grantor trust” for federal income tax purposes, meaning

that the grantor will be responsible for paying the income tax generated by the Dynasty

Trust on his or her personal income tax return, which allows the Dynasty Trust to grow

even further.

It may also be possible to structure a Dynasty Trust as a spousal limited access trust or

“SLAT” under which the grantor’s spouse is a beneficiary during his or her lifetime. This

allows an opportunity for trust funds to be distributed to the grantor’s spouse in case those

funds were ever needed again in the future.

— Kenneth F. Hunt

2017 Estate and Gift tax exclusion amounts

On an annual basis, the Internal Revenue Service (IRS) reviews the Consumer Price Index

to determine if the Estate and Gift tax exclusion amounts should be adjusted for inflation.

For 2017, two of the three estate and gift tax exclusion amounts will be increased.

Annual gift exclusion

http://web20.nixonpeabody.com/trusts/Pages/Trusts-And-Estates.aspx?ID=150&Title=What+is+a+SLAT

The annual gift exclusion is the amount that an individual donor is allowed to exclude per

donee from the donor’s taxable gifts in a calendar year. For 2016, the annual gift exclusion

amount was $14,000. The annual exclusion amount for 2017 will remain at $14,000.

Annual gift exclusion for non-U.S. citizen spouses

This annual gift exclusion applies to the amount that a U.S. citizen spouse can transfer to

his or her non-U.S. citizen spouse without a gift tax consequence. In 2016, this exclusion

was $148,000. In 2017, the exclusion will increase by a thousand dollars to $149,000.

Note: there is no limit on the amount that a U.S. citizen spouse can transfer to a U.S.

citizen spouse in a calendar year.

Lifetime exclusion

The lifetime exemption is the combined amount that an individual can transfer during the

individual’s lifetime and/or at death that is excluded from the gift and estate tax. In 2016,

the lifetime exemption was $5,450,000. The lifetime exemption will increase in 2017 to

$5,490,000. The Generation-Skipping Transfer (GST) tax exclusion will also increase to

$5,490,000.

The annual, lifetime and GST exclusion amounts present opportunities for individuals to

transfer wealth to family and loved ones without paying gift or estate tax.

— Mary-Benham B. Nygren

For more information, please contact:

— Kelly Acevedo at [email protected] or 585-263-1057

— Deborah L. Anderson at [email protected] or 617-345-1206

— Christopher F. Caldwell at [email protected] or 617-345-6058

— Kenneth F. Hunt at [email protected] or 585-263-1230

— Mary-Benham B. Nygren at [email protected] or 617-345-6165

— Mary M. Paul at [email protected] or 585-263-1371

— Thomas A. Stedman at [email protected] or 585-263-1029

— Alyson L. Stevenson at [email protected] or 585-263-1262

— Julie M. Wood at [email protected] or 617-345-1190

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