• Cole Gorman

How the tax overhaul will impact high-asset estate planning

Christmas may be over, but if you are in the process of planning your estate, you may still be thinking about gifts. A major part of estate planning is making gift transfers to certain beneficiaries. This is a great way to transfer your wealth to family members or loved ones, even though there is a limit on the amount of money that can be gifted without incurring taxes.

The national tax overhaul that was passed a few days before the holiday season will have a far-reaching impact on several fields, including estate planning. Specifically, the new tax law will have major implications on gift transfers—some positive, and some negative. When you are planning your estate, you should understand these new changes and how they could affect you and your family members.

The pros

The tax overhaul has a lot of benefits for high net worth individuals who are planning their estates. The most significant benefit regarding estate planning is the amount of money that can be transferred without incurring taxes. Under the new law, the amounts that individuals can transfer without incurring Gift, Estate and Generation Skipping Taxes will significantly increase.

  1. The annual amount that can be excluded from Gift tax will increase from $14,000 to $15,000.

  2. The exemptions for Gift/Estate/GST taxes will double from $5 million to $10 million. And that amount will also be indexed for inflation—a whopping $11.2 million in 2018.

The cons

Unfortunately, there are still a few downsides. They are slightly outweighed by the benefits, but they are there nonetheless.

  1. The Gift tax rate will remain the same—40 percent. That is a significant chunk of change that the IRS can take from transfers over $15,000.

  2. The increased exemptions will not last forever. They are set to expire within seven years, on December 31, 2025. If Congress does not move to extend them, they will revert back to their former limits.

Planning your estate accordingly

It would be wise to take advantage of the higher limits on Estate/Gift/GST exemptions before they expire. If you wish to make gift transfers to your children, the time to do it is now. An estate planning attorney can help you make the most of the new tax law as it applies to your estate.

0 views0 comments

Recent Posts

See All

If you own several different companies, franchises, or properties the management overhead can be considerable. When they are set up as independent entities the fees and filings take up a lot of manpow

With firearms legislation once again in the headlines, savvy firearms owners should consider creating a gun trust as part of a larger estate plan. A gun trust is a trust created to hold ownership of f

For many people, a pet is more than just an animal. A pet can be a cherished friend and a beloved member of the family. But what would happen to your pet after you pass away? Would a family member ado