The New Tax Law and Estate Planning

Estate tax planning just got easier for a lot of people with the passage of Tax Cuts and Jobs Act last month. Despite all the speculation about repeal, that didn’t happen. But the threshold amount for the payment of the “death” tax doubled.

For individuals dying after 12/31/17, there is no federal estate tax due unless the estate value is more than $11.2 Million (reduced by lifetime taxable gifts that go over $14,000 in any year).

For a married couple, the amount is $22.4 Million, because the 2nd spouse can take whatever the 1st spouse doesn’t use. To do this, a federal estate tax return must still be filed for the 1st spouse. These amounts will go up each year, indexed for inflation.

However, unless Congress acts before then, the figures go back to the current level of $5.2 Million per person in 2026, also indexed for inflation. For this reason, making lifetime taxable gifts of more than $5 Million per person is risky until we know what future legislation will do. Still, a nice dilemma to have.

Indiana repealed its Inheritance Tax several years ago.

Estate and personal wealth-transfer planning is still a good idea for most people.