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Estate Planning Under Comprehensive Tax Reform

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Congress has passed comprehensive tax reform by an act entitled “An Act to Provide for Reconciliation pursuant to Titles II and V of the Concurrent Resolution on the Budget for fiscal year 2018” (the “Act”). While we are still in the process of reviewing the Act and will provide additional updates, the following chart highlights key points impacting estate planning. Note that other aspects of the Act may affect the information outlined below.

Existing Law

New Law as of January 1, 2018

Federal Estate, Gift & Generation-Skipping (GST) Tax Exemption

Estate tax and gift exemptions would have been $5.6M for individuals and $11.2M for married couples as of January 2018.

Exemptions doubled to $11.2M per person as of January 1, 2018 ($22.4M for married couples). GST exemption tracks estate tax exemption.

Starting January 1, 2026, the exemption amount will revert to 2017 rules.

Top Federal Estate, Gift & GST Tax Rate

40% on amounts above exclusion.

No change in existing law.

Portability

Portability permitted by surviving spouse is a deceased spouse’s unused exemption.

No change in existing law.

Federal Estate Tax Deduction For State Taxes

Yes

Yes

“Step-Up” In Income Tax Basis For Property Passing At Death

Yes

Yes

Annual Exclusion

$15,000

(indexed for inflation)

$15,000

(indexed for inflation)

Note: The application of valuation discounts in family limited partnerships which had been stated to be drastically curtailed pursuant to proposed regulations under 2704(b) remain viable under existing as well as new law. Other planning vehicles such as QPRTs, GRATs, Grantor Trusts, GST Tax Exempt Trusts and Charitable Lead and Remainder Trusts also remain viable.

For more information on the topic discussed, contact Yolanda Kanes at kanes@thsh.com.



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