Will the New Tax Law Affect Your Estate Plan?
The Tax Cuts and Jobs Act, signed into law in December 2017, has wide-ranging effects on how people both prepare their taxes and engage in estate planning. The changes to the law have led to many questions on the part of those who are trying to plan for the years ahead. Below is a brief overview of some of the ways in which estate planning may be affected by these changes, which are now in effect.
Increased estate tax exemption
The reforms raised the estate tax exemption to $11.18 million per individual and $23.36 million for a married couple — both about double what the exemption had been under the previous rules. This means significantly fewer people will now have to worry about the estate tax, which can be a burden for wealthy individuals and families as they plan their estates.
Generation-skipping tax rate exemption
The generation-skipping tax (GST) rate exemption increased to the same level as the estate tax exemptions for both individuals and married couples. Like the estate tax exemption changes, they are set to expire at the end of 2025, when the rules will revert to what they had been before the implementation of the new legislation.
Methods of calculating inflation for exemptions
Under the previous rules, the Consumer Price Index (CIP) was used to calculate inflation on the above exemptions. Now, inflation and exemptions will be calculated based on the Chained-CPI, a type of adjusted inflation measure that also accounts for “situation bias” and for the changing purchasing behaviors of American consumers.
For more information on the effects of the Tax Cuts and Jobs Act on your estate planning efforts, meet with a trusted Tampa estate planning lawyer at BaumannKangas Estate Law.