JANUARY/FEBRUARY 2018 • FOGHORN 43 NEWSWIRE EPA, CONTINUED ON PAGE 43 Let MCM manage your insurance so you can focus on your voyage MCM is a leading independent insurance brokerage based in the Pacific Northwest. Our marine practice group has more than 100 years of combined experience placing insurance and managing the marine industry’s unique risks. Whether we’re working with vessel operators, builders, repair facilities or suppliers, we create specialized solutions that meet each client’s needs. EMpLoyEE BEnEfits | ExECutivE BEnEfits | REtiREMEnt pLans insuRanCE advisoRy | pRopERty & CasuaLty Contact Damon L. Nasman at (206) 262-6375 or email damon.nasman@mcmnw.com www.mcmnw.com Federal Estate Tax Eliminated for Most Taxpayers Since many PVAvessel members are operated by family-owned entities and are passed from one generation to the next, the impact of federal estate taxes can play a significant role in business planning. Such companies may have considerable capital assets but may generate relatively modest annual revenues. The recently enacted federal tax reform legislation, signed (Public Law 115-97) by President Trump on December 22, 2017, provides dramatic relief for many estates, effective January 1, 2018. For a time, it appeared that lawmakers might abolish the federal estate and gift taxes altogether. At the end of the day, legislators chose not to do that. However, they did approve major increases in the estate and gift tax exemptions. The result: many estates that would have been subject to estate tax payments under the prior law will no longer have to contend with them. Previously, an individual could make lifetime gifts or pass on to heirs up to $5.49 million without being subject to the unified gift and estate tax. With a properly structured plan (developed after consultation with a knowledgeable tax advisor), married spouses could combine their individual $5.49 million exemptions to make sure that assets valued at nearly $11 million would be exempt from federal estate taxes.  The new tax law doubles these exemption amounts. Now, in most cases, transfers of up to an aggregate amount of $11,200,000 (roughly $22.4 million for a married couple) will be effectively sheltered from gift or estate taxes. Furthermore, the new exemption amount will be indexed for inflation each year. Thus, most owners of private vessel-operating companies are likely to be shielded from federal estate taxes (although it is important to consult with an expert tax advisor). For purposes of the gift tax, a taxpayer can now give up to $15,000 each year to an individual without having it count against the federal gift/ estate tax exclusion amount. This yearly tax-free $15,000 gift can be donated to as many individuals as the taxpayer desires. One odd thing about the changes in the estate and gift tax law is that they will “sunset’ at the end of the year 2025. Without further action by Congress by then, the law will revert to the exclusion amounts that were allowed in 2017. Does anyone really expect that Congress will allow this “snap-back” to occur? n