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Knoxville, TN - The Tennessee Legislature has repealed the Tennessee Inheritance Tax (affectionately known as the “death tax”), which will be effective in 2016, and the Tennessee Gift Tax, which will be effective retroactively to January 1, 2012. The repeal of the Inheritance Tax will occur gradually with exemptions increasing every year until the full repeal in 2016. The Inheritance Tax exemptions increase as follows: $1M in 2012, $1.25M in 2013, $2M in 2014, $5M in 2015, and the tax is eliminated altogether in 2016.
It has been argued that the gift and inheritance taxes were discouraging seniors from living their retirement years in the state and that they were a deterrent to new businesses moving into Tennessee. Since the first of the year, Governor Haslam supported a plan that would raise the inheritance tax exemption to $1.25 M in 2013 as a first step towards unifying the Tennessee and federal exemptions (currently $5.12M). However, in recent months, the idea of totally repealing the tax began to gain some traction in the legislature. The additional repeal of the Gift Tax was an added surprise.
According to Knoxville Wills Attorney Michael L. Smith, Esq., “This is great news for Tennesseans as the inheritance tax creates what I believe is an unnecessary burden on estate beneficiaries. The tax repeal will encourage people to move to Tennessee and will certainly attract more businesses to the state.”
So what does this mean exactly? First, it means that Tennesseans will still have to deal with the Inheritance Tax for a few more years and plan accordingly. Secondly, this is a major victory for Tennessee families, especially in rural counties. The Inheritance Tax has always been a formidable opponent for folks trying to pass along a family farm. It has also taken its toll on many upper middle class families that failed to properly plan their estates. Thirdly, the repeal of the gift tax provides families with a unique opportunity to make large inter vivos (i.e., during their lifetime) gifts to the next generation. The gifting window, however, may be small if congress decreases the federal gift tax lifetime exemption before the end of the year. Lastly, if congress does not reduce the federal estate tax exemption by December 31, 2012, essentially every couple under $10M net worth now has a basic estate. This is great news for taxpayers and it’s also a great time to create simple Knoxville wills and put your estate affairs in order.
About Michael L. Smith, Esq.
Michael L. Smith provides customized legal solutions for the citizens of Farragut, Knoxville, Knox County, Maryville, Blount County, Loudon County, Anderson County, Sevier County, and the East Tennessee region. Mr. Smith holds a B.S. in Business Management from Carson-Newman College, an M.S. in Sport Management from The University of Tennessee, and a J.D. from Liberty University School of Law. During law school, Mr. Smith served as the Student Bar Association President of his class. Additionally, Mr. Smith served in the Bush White House as an intern in the Presidential Personnel Office. While at the White House, Mr. Smith assisted in recruiting executives to serve the President in the U.S. Department of Commerce, the U.S. Department of the Treasury, and the U.S. Department of Transportation. Mr. Smith's practice areas include: Estate Planning, Estate Administration, and Business Law. Mr. Smith is a member of the Tennessee Bar Association and the Christian Legal Society. For more information visit http://www.michaellsmithlaw.com.
Contact:
Michael L. Smith, Esq.
Attorney & Counselor at Law
11915 Kingston Pike, Suite 102
Knoxville, TN 37934
Ph: (865) 777-9455
Fax: (865) 777-9456
The information contained in this document is not intended to constitute legal or tax advice. An attorney should be consulted regarding your particular situation. Tennessee law requires that we inform you that THIS IS ADVERTISING MATERIAL.
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