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
1. Revisit any old trusts
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.
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.
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.