Last week the Administration presented its budget proposal for 2015, adhering to the spending limits already set by Congress. From an estate planning point a view, here are some of the budget's most relevant proposals:
First, a proposal to return to federal estate tax levels of 2009. This would bring the federal estate tax exemption back down to $3.5 million per individual, from today's level of $5.34 per individual indexed to inflation. In addition, the top federal estate tax rate would rise from 40% to 45%. However, portability - the ability of a surviving spouse to use any portion of the exemption not used by the deceased spouse - would remain in effect.
Second, a proposal requiring non-spouse beneficiaries of an IRA or other qualified plan to take distributions within a five-year period. Certain classes of beneficiaries would be exempted from the rule, for example, disabled individuals or minor children.
You can access the entire proposed budget in the Department of the Treasury Green Book here. (The item dealing with estate tax issues is page 158: IRAs, page 253.)
No one knows how all this will actually play out. Besides the usual political tug of war, there surely are events none of us can foresee that will affect the outcome. Stay tuned.