December 21, 2017
The Tax Cuts and Jobs Act has been passed by Congress and is expected to be quickly signed into law. The legislation includes important changes to the estate and gift taxes. Most notably, it doubles the lifetime estate and gift tax exemption amount. Under prior law, the combined estate and gift tax exemption was $5,000.000.00, adjusted for inflation. That meant that in 2017, every individual could give away up to $5,490,000.00 through a combination of lifetime gifts and transfers upon their death without paying federal estate or gift taxes.
The Tax Cuts and Jobs Act doubles the exemption amount to $10,000,000.00, adjusted for inflation. Therefore, in 2018, the amount that can be given away before paying estate or gift taxes is $11,200,000.00 per individual. A husband and wife who maximize both spouses’ exemptions can give away $22,400,000.00.
The increased exemption amounts will have a significant impact on some estate plans. The changes may make some prior tax planning obsolete. As with any significant change in the law, individuals should consult with their estate planning attorney to determine the impact on their plan, and whether any changes are necessary.
For Important Legal Updates and Resources on the Coronavirus Click Here.