The Taxpayer Relief Act of 1997

The Taxpayer Relief Act of 1997 included many changes in the estate and gift tax area. See Title V for the complete statutory language. See the Title V Statement of the Managers for a description of the provisions.

The Taxpayer Relief Act of 1997 also included a provision prohibiting charitable remainder unitrusts and annuity trusts from having payout rates greater than 50%. Also included was the additional requirement that charitable remainders must have a minimum value of 10% of the trust. (Issue: Does the 10% minimum remainder interest requirement apply with the preceding month's AFR, when used, or with the current month's AFR, or both?) See Sec. 1089 for the complete statutory language.

The 1997 tax act included IRC 529 which permits tax-deferred college savings plans which have potentially large estate tax planning benefits. See The tuition estate trick by Janet Novack in Forbes (pp. 142-145, 2/22/99) and College Savings 101 by Janet Novack in Forbes (pp. 389-393, 10/30/2000) for more details.

The 1998 IRS Restructuring Bill included a surprise estate tax change. Due to the opposition of Rep. Bill Archer, a technical correction that would have provided for a phaseout of the unified credit to be implemented was dropped. This unexpected change actually provides for lower estate taxes than expected for larger estates (over $17,184,000). This issue was discussed in The New York Times article (which is not available online), A Mistake Prevails, as Certainly as Death and Taxes, by David E. Rosenbaum (6/24/98, p. A19). 

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