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Estate Planning & Probate Law FLASHPOINTS December 2018

December 14, 2018Print This Post Print This Post

Janet Rae Montgomery, Daluga, Boland & Montgomery, LLC, Chicago
312-262-5090 | E-mail Janet Rae Montgomery

FinCEN Expands Cities Covered by GTOs

Practitioners have to keep track of more and more acronyms, but because lawyers love “alphabet soup,” bring them on.

Just before Thanksgiving, the Financial Crimes Enforcement Network (FinCEN) announced revised geographic targeting orders (GTOs) expanding the geographic areas covered. U.S. title insurance companies are obligated to identify and report the identity of the natural persons behind shell companies used in all-cash purchases of residential real estate. FinCEN, FinCEN Renews Real Estate “Geographic Targeting Orders” to Identify High-End Cash Buyers in Six Major Metropolitan Areas, U.S. Treasury. The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area. FinCEN is also requiring that covered purchases using virtual currencies be reported.

From FinCEN’s press release:

Previous GTOs provided valuable data on the purchase of residential real estate by persons implicated, or allegedly involved, in various illicit enterprises including foreign corruption, organized crime, fraud, narcotics trafficking, and other violations. Reissuing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector. FinCEN, FinCEN Reissues Real Estate Geographic Targeting Orders and Expands Coverage to 12 Metropolitan Areas, U.S. Treasury.

Added to the prior GTOs, which formerly included New York, Miami, San Francisco, and portions of Texas, the new GTOs cover certain counties within the following major U.S. metropolitan areas: Boston; Chicago (we finally made the list!); Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle.

Do not be surprised if your real estate deal is held up because you must know and report exactly who your client really is.

IRS Announces New Inflation-Adjusted Numbers in Int.Rev.Proc. 2018-57

Also just before Thanksgiving, the IRS announced that the 2019 federal exemption amount for transfer tax purposes will be $11.4 million. A chart of the 2019 information for estate planning purposes follows:

Estate tax/gift tax exemption$11.18 million$11.4 million
Maximum estate tax/gift tax rate40%40%
Annual gift tax exclusion$15,000/donee$15,000/donee
Annual exclusion gift to non-citizen spouse$152,000$155,000


No Clawback on Gifts During Suspension Period

Also just before Thanksgiving, the IRS issued proposed regulations implementing changes made by the Tax Cuts and Jobs Act of 2017, Pub.L. No. 115-97, 131 Stat. 2054. These changes, in effect, provide that if a taxpayer makes a gift between now and 2026 using the higher exemption levels, and then dies in 2026 or later when those exemptions revert to an inflation-adjusted $5 million, the taxpayer’s estate can instead use the greater of the exemption level at the time of the gift ($11 million or more) on their estate tax return. IRS, Treasury, IRS: Making large gifts now won’t harm estates after 2025.

“[T]he proposed regulations provide a special rule that allows the estate to compute its estate tax credit using the higher of the basic exclusion amount (BEA) applicable to gifts made during life or the BEA applicable on the date of death.” Id. “As a result, individuals planning to make large gifts between 2018 and 2025 can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.” Id.

Public comment on the proposed regulation is invited.

Hope this helps you help others.

For more information on Estate Planning and Probate, see ASSET PROTECTION PLANNING — 2018 EDITION. Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.


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