J. Kelly Kennedy, Attorney/CPA, PLLC

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Attorney and CPA

Modern day estate tax issues continue to define century-old law

2016 is the 100th anniversary of the modern day federal estate tax. As part of the Revenue Act of 1916 signed by President Woodrow Wilson, the federal government created the tax to help fund the United States' effort in World War I. As of 2014, estate taxes accounted for $16 billion in federal revenue. Although the country is no longer involved in world wars, the estate tax continues a century later.

Since 2001, federal estate tax laws have changed dramatically. While the tax rate and brackets have increased, so have the number of exemptions and loopholes in the law. Simply put, the main issue with federal estate tax law today is that it has changed almost yearly since 2001. What was relevant to your estate in 2010 may have changed as of 2014.

Emerging issues with same-sex marriage and digital property continue to affect estate tax law in 2016. Here are two examples:

Same-sex marriage

The 2013 Supreme Court case United States v. Windsor touched on same-sex marriage as it applies to the estate tax. Because the federal government did not recognize the same-sex couple's marriage at the time, the surviving spouse was forced to pay federal estate taxes on her inheritance of her wife's estate. The Supreme Court, instead, ruled the tax exemption should apply to same-sex marriage as it does to heterosexual couples despite the restrictions of the Defense of Marriage Act and New York state law.

Since the Supreme Court legalized same-sex marriage nationwide in 2015, married same-sex couples have had equal access to the same federal benefits of opposite-sex couples. As the definitions of marriage and family continue to change, so will the law related to estate taxes.

Digital property

Federal law restricts access to some online personal information. Therefore, it is important to outline who may be entitled to certain assets and passwords in your will. Established resources like online bank accounts, internet-based businesses and websites could all qualify as inheritable property.

In Minnesota, state legislators in the 2016 session clarified procedures for enabling fiduciary access to digital assets. Since states are the laboratories of democracy, we could soon see these same issues addressed in Florida and at the federal level.

Lifestyle diversity and new technology continue to raise issues related to estate taxes. Because of these rapid changes to the law, now may be the time to talk to a trusted attorney about your family's estate plans. 

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