Kent Larsson writes about the proper use of wills, advance directives, trusts, and other estate planning tools, and how how they play a vital role in you receiving proper medical care and helping you to preserve and pass on your assets to your loved ones.
New rates are important to estates, as well as for estate planning.
The IRS has announced some important changes in tax adjustments and deduction limits based on inflation. They can make a difference for people planning their estates, according to the Wills, Trusts & Estates Prof Blog in "Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan."
• Lifetime gift tax exemption increased to $5.6 million.
• Annual gift tax limit increased to $15,000.
• Annual gift tax limit to a foreign spouse increased to $152,000.
• Estate tax exemption increased to $5.6 million.
• Failure to file a return within 60 days of due date, to result in a penalty of $215 or 100% of amount due, whichever is lower.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and takes the new IRS rates into consideration.
Reference: Wills, Trusts & Estates Prof Blog (Nov. 8, 2017) "Estate Planning Inflation Adjustments for Tax Year 2018 & 2017-2018 Priority Guidance Plan
Trump administration and GOP moving toward tax reform, including eliminating estate tax.
There are many tax reform possibilities as President Trump and Congress look to the future. However, a complete repeal of the estate tax is included in the framework tax reform, according to Forbes in "Trump GOP Tax Reform Framework Calls For Estate Tax Repeal."
Despite including a repeal of the estate tax, the framework is silent on the gift tax. This tax normally goes hand in hand with the estate tax.
If the ideas in the framework were eventually to become law, that would mean pre-death transfers could still be taxed, while post-death transfers to the exact same people would not be.
Of course, releasing a framework for reform is not the same as passing legislation.
This Congress is not known for moving quickly, so tax reform is most likely still a long way off.
Reference: Forbes (Sep. 27, 2017) "Trump GOP Tax Reform Framework Calls For Estate Tax Repeal."
A slight increase could bring estate tax exemption for couples to $11 million.
Analysts are projecting the IRS will increase estate tax exemptions for 2018, as well as boost the annual gift tax exemption, according to Forbes in "Estate Tax Exemption To Top $11 Million Per Couple in 2018."
Analysts forecast an increased exemption for a single person to $5.6 million and approximately $11 million for married couples. The gift tax exemption is estimated at $15,000.
This should give wealthy people and their estate planning attorneys a little bit more flexibility, as they attempt to shrink estates to below the threshold.
While most people who might be affected by this exemption increase would prefer to see the estate tax repealed entirely, that is increasingly looking like it will not happen this year.
Congress has turned its attention to tax reform, but getting anything passed could be a long process and will likely continue into next year.
Repealing the estate tax is also controversial. If Democratic votes are needed to pass tax reform legislation, it might take the estate tax off the table.
An estate planning attorney can answer any questions you have on the estate tax and gift tax exemptions, as well as advise you on creating an estate plan that fits your unique circumstances.
Reference: Forbes (Sep. 15, 2017) "Estate Tax Exemption To Top $11 Million Per Couple in 2018."