New Tax Law Temporarily Changes Estate Tax Exemptions
Since the new tax bill was signed into law in December, many people have been asking about how the changes could affect their estate plans.
At this time, many of the effects of the law remain to be seen. One area in which we can be relatively certain of how the bill will affect estate planning, however, is related to the estate tax. Under the new law, the lifetime estate and gift tax exemption doubled to $11.2 million per decedent. Married couples can pass on up to $22.4 million tax-free. The rate on any value over those limits remains at 40 percent.
However, these changes are not permanent. Once we reach January 1, 2026, the unified estate and gift tax exemption will go back to the level it was at in 2017: $5.6 million per individual and $11.2 million per married couple. This assumes the law will not change at all before 2026. Elections in 2018 and 2020 could play a major role in determining what will happen to federal tax policy in the future.
What steps should I take right now?
Despite what may or may happen later, it is important for everyone to review their current estate planning documents to determine if they should make any adjustments to accommodate the changes in U.S. tax law. Ideally, your estate plan should give you enough flexibility to anticipate potential changes to the law in the years to come.
To learn more about how tax policy changes could affect your estate plan, speak with an experienced Tampa estate planning attorney at BaumannKangas Estate Law.