United States

Related Articles

New Developments
  • Rates and credits in Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act 2010 (TRA 2010) sunset 31 December 2012. Absent further legislation, Federal estate, gift and generation-skipping transfer taxes to have USD1 million exclusion amount and 55 per cent top rate with portability of unused spousal exclusion amount eliminated.
  • Internal Revenue Service (IRS) released new Form 8938 – Statement of Specified Foreign Financial Assets.
  • IRS began open-ended offshore voluntary disclosure programme encouraging taxpayers to disclose foreign accounts and avoid possible criminal prosecution.
Practice Trends
  • Legislative uncertainty continues in the area of estate and gift tax planning. Succession planning for US citizens/ residents focuses on using USD5,120,000 exemption amount in 2012 since likely to decrease.
  • More states enacting trust laws allowing for decanting of irrevocable trusts and separation of investment, distribution and administrative responsibilities traditionally associated with role of trustee.


A. History And Background

The United States (US) is a union of 50 sovereign states plus the District of Columbia and 15 dependencies. Property laws affecting trusts and estates are a matter of state law, consisting of statutes and court precedents, and vary from state to state. The Uniform Probate Code (UPC), a model set of laws governing the devolution of property at death, has been adopted in whole or in part by at least 18 states. The Uniform Trust Code (UTC), a codification of the common law of trusts, has been adopted in whole or in part by at least 24 states. The Hague Convention on the Law Applicable to Trusts and on their Recognition, 1 July 1985 has not been approved by the US Congress.

The currency is the US dollar (USD).

B. Legal System

The US operates under a federal legal system whereby the federal government has specific, enumerated powers under the US Constitution. The states retain those powers not enumerated in the US Constitution. The US Constitution creates a tripartite system of government made up of the legislative, executive and judicial branches. The legislative branch, or Congress, consisting of the House of Representatives and the Senate, enacts federal laws. The executive branch, consisting of the President and advisors, has administrative and regulatory authority to carry out federal laws. The judicial branch, consisting of the Supreme Court and a network of subsidiary lower courts, interprets federal laws.

C. Taxation

Tax in the US is imposed at both the federal and state levels, and in some instances at the local, county or city level. Federal tax authorities must rely on state law to determine a taxpayer’s property rights. Almost all transactions have a federal-level tax consequence as well as a state one. Partial offsets for state taxes are usually available in determining federal tax.

Editorial Board
Jennie Cherry TEP (lead editor)
Kozusko Harris Duncan, LLP, New York, US
Tina Albright TEP
Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, US
Stanley A Barg TEP
Kozusko Harris Duncan, LLP, New York, US
Thomas Kenney TEP
Fiduciary Trust International, Los Angeles, US


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