Seize the opportunity to make the most of your estate plan while the current laws are still in place.

  • As with any change in tax legislation, the 2017 Tax Cuts and Jobs Act (the Tax Act) gave rise to valuable planning opportunities. 
  • The current tax law serves as a good reminder to review your estate plan to be sure that it is consistent with your current goals and is flexible to promote tax efficiency under today’s tax laws. 
  • Many of the provisions of the Tax Act are scheduled to sunset after December 31, 2025.

In late 2017, both Houses of Congress and President Trump passed sweeping tax legislation impacting virtually all areas of federal tax law.  As with any change in tax legislation, the Tax Cuts and Jobs Act of 2017 gave rise to valuable planning opportunities. Before exploring possible planning opportunities it’s important to understand what changed and what has stayed the same.  

Changes to tax law
The most impactful tax law change for estate planning purposes was the increase in the federal estate, gift, and generation-skipping transfer (GST) tax exemptions (collectively, the federal exemption) for each individual. The federal exemption more than doubled and now sits at $11.58 million per individual for 2020. The top federal estate, gift, and GST tax rate remains at forty percent. Also unchanged are (i) portability of a deceased spouse’s unused exemption, (ii) stepped-up (or -down) basis of most assets included in a deceased individual’s estate, and (iii) valuation discounts for minority interests and lack of marketability. The increased federal exemption provides a golden opportunity for  individuals whose net worth is above the previous exemption to enhance their estate plans and preserve more wealth for their heirs. As a high-net-worth individual, it is critical to work with your advisors now to determine the tax law’s impact on your own situation, and to take advantage of estate tax planning opportunities now that could help mitigate the negative effects of federal estate, gift, and GST taxes on your estate.

Many of the provisions of the new tax law are scheduled to sunset after December 31, 2025, at which time the prior provisions of the tax law would return if no further legislative action is taken. Further, given the nature of politics and fiscal realities, there always exists a very real possibility that the estate tax law will be modified prior to 2025.

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.  

IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, while this publication is not intended to provide tax advice, in the event that any information contained in this publication is construed to be tax advice, the information was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any matters addressed herein.

Download Article