Happy New Year – 2021! Now, Let’s Discuss Taxes!

The IRS has increased exemptions for 2021, which could be helpful to you. Specifically, the federal estate tax exemption has increased to $11.7 million (up from $11.58 million in 2020.) This is the amount you can transfer at your death or (as a lifetime credit) transfer as a gift during your lifetime (less gifts you have already made). As this tax exemption sunsets at the end of 2024 and returns to 2017 exemption amounts ($5.49 million), the current exemption presents an estate planning opportunity for you.

The annual gift tax exclusion amount remains $15,000 in 2021.

Virtual Estate Services

Life is busy! So many of us have had “estate planning” on our “To Do” list for far longer than we’d like to admit.

My estate practice relies on technology, to serve you from the comfort of home, at a time convenient for you. While I always enjoy meeting clients face to face, if your schedule does not allow for in person meetings, my practice relies on teleconferencing and video conferencing (Zoom, Google Duo, or FaceTime) to allow for virtual meetings at a time and location most convenient for you.

March 2020 UPDATE: At this time of social distancing, when in-person meetings are not available, we are ready to serve you virtually via either video conference or teleconference.

Inheritance Tax in Indiana

Good news for Hoosiers doing their estate tax planning: Indiana does not have an inheritance tax.  Indiana previously had an inheritance tax, but it was repealed in 2013.  Thus, there is no Indiana Inheritance tax for those who die after December 31, 2012.

Indiana is in good company.  The majority of U.S. states do not have Inheritance Tax.  However, Federal Estate Tax and other taxes remain and are important considerations in planning your Indiana estate.

New Tax Law

Happy New Year!

We have some big tax changes. Highlights of the new tax law’s impact on your estate planning:

  • Federal Estate Tax:
    o The federal estate tax exemption amount has doubled. In 2018, each individual has a $11.2 Million exemption amount. This is double the 2017 exemption of $5.49 million per person.
    o As with recent years, the federal estate exemption amount will continue to be adjusted annually for inflation.
    o Portability remains. This means in 2018 a married couple can collectively pass $22.4 Million without Federal Estate Tax.
    o The stepped-up basis remains.
    o The top federal estate tax rate, on transfers more than the exemption amount, remains 40%.

 

  • Gift Tax:
    o The gift tax lifetime exemption amount has similarly doubled, now at $11.2 Million per person as well.
    o In 2018, the annual gift tax exclusion is $15,000 per person, an increase of $1,000 from 2017. The annual exclusion will continue to be annually adjusted for inflation.

 

  •  Generation Skipping Tax (“GST”)
    o The GST has also doubled in 2018, to $11.2 Million per person.

But note that under the new law, on January 1, 2026, these increases will all revert back to 2017 amounts.

With these significant changes in tax exemptions, it’s a good time to pull out your estate planning documents and review your plan. If your estate benefits from these exemption increases, you will want to evaluate whether to make gifts prior to the 2026 return to 2017 amounts.

It is also a good time to make sure your documents reflect your current intentions. In additional to reviewing who are the beneficiaries of your estate, review all of your decision makers. Include your incapacity documents in this review (Power of Attorney and Health Care Representative) and make sure you still have the correct persons named.