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.

Tax Updates for 2017

Happy New Year!  Tax updates for the new year:

  • The Federal Estate Tax exemption amount has increased to $5.49 million per person.  With portability, this means a married couple can collectively transfer just less than $11 Million ($10.98 Mill to be precise).
  • The annual gift tax exclusion amount remains at $14,000 per person.  For a married couple, they can each make a gift of $14,000 to the same individual, providing for a total gift of $28,000 to that person.

Happy New Year!

With 2016 only a few hours away, here’s a look at changes to the Federal estate and gift tax exemptions for 2016.

  • The Federal Estate Tax Exemption amount will be $5.45 million per individual, an inflation-adjusted increase from $5.43 million in 2015.
  • The annual gift tax exclusion amount remains at $14,000, the same as in 2015.

The increase in the Federal Estate Tax Exemption means an individual can leave $5.45 million to her beneficiaries without Federal Estate Tax, or gift tax during her lifetime. In 2016, a married couple will be able to collectively transfer $10.9 million without Federal Estate Tax, or gift taxes during their lifetimes.

Happy New Year!