How The New Tax Laws May Affect Your Estate Plan

By Anne Wenger

Congress’ passage of the new tax bill got a lot of press. What didn’t, though, was its effect on a person’s estate plan.

The most prominent change comes in the form of new the estate, gift, and generation-skipping transfer (GST) tax exemption amounts which jumped significantly. Under the new law, the exemption for decedents dying after December 31, 2017 increased to approximately $11.2 million for individuals and $22.4 million for married couples. These numbers are more than double those from 2017 ($5.49 million and $10.98 million, respectively).  What’s more, these exemption amounts are slated to increase with inflation each year until 2025. However, it is important to note that the increase in the exemption amount is set to expire on December 31, 2025, and will revert back to the prior law unless extended ($5 million per person, adjusted for inflation).

With this change, it is prudent to check in with your estate planning attorney to evaluate how the change in law may affect you. Perhaps some of the planning previously done in an effort to avoid taxes may not be necessary, and in turn becomes more burdensome than helpful.  For example, the common “A/B” Trust structure, wherein assets are split into two separate trusts upon the death of the first spouse (one of which becomes irrevocable), may no longer suit the needs of your family.  The unique circumstances of each family will dictate whether any adjustments should be made to your estate plan in order to take advantage of the new law. 

About the author: Anne Wenger focuses her practice in McLaughlin Legal’s Tax and Estate Planning division. She can be reached at anne@mclaughlinlegal.com.

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