What Changes Does the “Tax Cuts and Jobs Act” Make to Estate Planning?

There are a variety of tax law changes as a result of the “Tax Cuts and Jobs Act” (the “Act”). However, the following is a brief summary of the specific changes that will impact estate planning issues.

Although only approximately 0.2% of the population was subject to the federal estate tax prior to the Act, now the estate tax will apply to even fewer people. If you died in 2017, you could leave up to $5,490,000.00 estate tax free as a single person and $10,980,000.00 as a married couple. The Act changed the amount to $11,200,000.00 for a single person and $22,400,000.00 for a married couple. In addition to amounts that you can leave on death, these figures also apply to gift tax exemptions as well as generation-skipping transfer tax exemptions. The amounts will be adjusted for inflation in 2018 through 2025. However, on January 1, 2026, the amounts are scheduled to revert to the 2017 amounts adjusted for inflation. The top estate tax rate will remain at 40% and the tax rate for generation-skipping transfers will remain at a flat rate of 40%.

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