Posted in Asset Protection,Probate & Trust Administration,Tax Law & IRS Defense,Wills, Trusts & Estate Planning

It is recommended to periodically review your estate plan to determine if there are new planning opportunities of which you can take advantage.  Below are three tips as you move through 2019:

1. Revisit any old trusts

The Tax Cuts and Jobs Act of 2017 allowed for a significant increase in the estate and gift tax exemption and generation skipping transfer tax exemption.  For example, the estate tax exemption in 2000 was $675,000 and estates in 2000 with assets over that value were subject to a top estate tax rate of 55%.  In 2017, the estate tax exemption level was higher at $5,490,000.  However, the Tax Cuts and Jobs Act of 2017 raised these levels starting in 2018.  In 2019, the estate tax exemption rate is $11,400,000 and estates with assets over that value are subject to a top estate tax rate of 40%.  Married couples are eligible for porting an unused exemption to the other spouse so long as the proper procedure is followed.  This significant increase is subject to the whims of Congress, which is currently set to sunset in 2025 without further congressional action. 

It is important to consider the history of the estate tax exemption because estate plans are created based on the laws in effect at that time.  A lot of old trusts are more restrictive and geared toward navigating laws that were significantly different than they are now. If you have an old trust, it would be a good idea to review it to ensure it is the best for your current circumstances.

2.  Annual gifting

In 2019, individuals may make gifts of up to $15,000 per recipient without the need for filing a gift tax return and either paying a gift tax or applying the gift against your lifetime gift tax exclusion.  Gifts to a spouse are treated differently.  A gift to a spouse who is a citizen of the United States are not taxable regardless of the amount of the gift.  However, if you are making a gift to a spouse who is not a citizen of the United States, that is limited in 2019 to $155,000.

 3. Charitable contributions

As a result of the Tax Cuts and Jobs Act of 2017, itemized deductions have been significantly affected.  If you are in the habit of making charitable gifts, it may be desirable to consolidate such gifts into one year instead of giving annual gifts. 

Please consult with professionals, such as a tax attorney, accountant, financial planner and estate planning attorney when you create an estate plan and before you gift significant assets.