The Rising Significance of Self-Cancelling Installment Notes as a Estate-Planning Tool for U.S. Citizens and Nonresidents
By Anthony Diosdi Federal law imposes a transfer tax upon the privilege of transferring property by gift, bequest or inheritance. This transfer tax takes the form of a gift tax in the case of completed lifetime gifts and an estate tax in the case of property owned by the decedent at the time of death. Gift and estate taxes are computed on the progressive unified rate schedule set forth in Section 2001 of the Internal Revenue Code with rates as high as 40 percent. As of 2022, the lifetime estate and gift tax exemption for U.S. domiciled single filers is $12.06 million and $24.12 million for married couples U.S. domiciliaries filing jointly. For nonresident aliens not domiciled in the United States, there is only a credit equivalent to $60,000 against…