Restructuring Federal Estate and Gift Taxes: Impact of Proposed Reforms on Estate Planning

It is undeniable that estate and gift taxes, in contrast to income taxes, have not received the legislative attention that they deserve. Congress has largely ignored these important segments of our tax structure for many years, and during that time a host of defects and inequities have become apparent. This congressional indifference in the estate and gift tax field can be attributed to the fact that these taxes, unlike the income tax, affect relatively few people, and that they produce less than two per cent of our total tax revenue. It is understandable, therefore, that while the major thrust of the Tax Reform Act of 1969 was to correct certain inequities in the income taxation of individuals, corporations, trusts, and estates, the Act did not deal directly with estate and gift taxation.

The regeneration of professional interest in this long-neglected area is a wholesome sign, and the robust disagreement and controversy will inevitably result in better legislation, regardless of the form that it ultimately takes. This Article will attempt to analyze the reforms that have been suggested, and to assess their impact upon existing estate-planning practices.