New Tax Law, New Estate Planning Considerations

Near the end of last year, we told you about the increase in the annual gift tax exclusion amount from $14,000 to $15,000 beginning January 1, 2018 (catch up on that topic here). The annual exclusion is a “use it or lose it” opportunity that does not eat into the federal estate and gift tax exemption amount that had been set at $5 million per individual, but indexed for inflation to a 2017 amount of $5.49 million.

Under the Tax Cuts and Jobs Act of 2017, the federal estate, gift and generation-skipping transfer (“GST”) tax exemption amounts increase to $11.18 million for individuals and double that amount for married couples. These exemption amounts will increase with inflation each year until 2025, after which the exemption amounts are scheduled to revert to the 2017 levels, as adjusted for inflation. The highest marginal federal estate and gift tax rates will remain at 40%.

Warning: Don’t think you need to do estate planning because of the larger exemption amounts? Many non-tax factors also impact your estate plan, such as naming a guardian for your minor children, choosing an agent to legally act on your behalf under the terms of a durable power of attorney, designating a patient advocate to make medical and potentially end-of-life decisions if you are incapacitated, and making sure your assets go to whom you choose.

If you have any questions or need assistance with this, contact the attorneys of Wright Beamer at (248) 477-6300.

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