How the Tax Cuts and Jobs Act of 2017 Impacts Estate PlanningJune 7, 2018

 
2018 brings several changes – and a few constants – to estate and gift tax law. At Curchin’s recent seminar on the key areas of change in the Tax Cuts and Jobs Act of 2017 (TCJA), I discussed the most noteworthy items relating to estate and gift tax, including:

Basic Exclusion Increase
Under the new tax law, the basic exclusion has more than doubled from $5 million per person to nearly $11.2 million per person. This number is derived from a chained CPI approach and means that each person has approximately $11.2 million to gift during their life or at death, aside from any previous gifting.

Annual Gift Tax Exclusion Increase
The annual gift tax exclusion has increased from $14,000 to $15,000 per person. For gifts made in stock or any other non-cash item, we recommend filing a gift tax return to memorialize fair market value and show basis.

“Clawback” Potential
With the $11.2 million exclusion set to lapse in 2025, there is concern that if the exclusion were to drop back down closer to the previous $5 million limit at that time, those who gifted the current $11.2 million could have the difference pulled or “clawed” back. However, the consensus is that this likely will not happen.

Portability
Married couples can still elect “portability,” in which the surviving spouse receives the unused exemption from the first to die.

Additional Considerations
These are the main highlights of estate tax laws under the TCJA. There are many more considerations, such as step-up in basis, New Jersey estate tax, state taxes, local taxes and AMT. With so many factors involved, it’s important to build a team of professionals, including an estate attorney, financial planner and tax professional. To learn more about Curchin’s estate planning practice and referral network, visit www.curchin.com.