The New Tax Law Means it is Now Time to Review Your Estate Plan
The tax law signed in 2017 doubled the federal estate tax exemption, meaning the vast majority of estates will not have to pay federal estate tax. It does not mean you should ignore its impact on your estate plan.
The law doubled the federal estate tax exemption to $11.18 million for individuals and $22.36 million for couples. (These figures are indexed for inflations, so in 2019 they are $11.4 million and $22.8 million, respectively) The tax rate for the few estates still subject to taxation is 40 percent.
Because of this change, you should review your estate plan to see if there is a better way to pass on your assets. As recently as 2001, the federal exemption was a mere $675,000. Many couples would create a trust that would “split” the trust assets into two “shares” to fund a Decedent’s Trust and a Survivor’s Trust. With the change in the federal estate tax exemption, it is now easier for couples to decide to leave all assets to the surviving spouse to hold in the Survivor’s Trust making it much simpler and less costly to administer the family trust after the death of the first spouse to die.
Many a client has been horrified to find out they have to split assets into two trusts during the life of the surviving spouse requiring extra bookkeeping, a fiduciary return and a personal tax return for the surviving spouse. This could have been avoided if they had reviewed their estate plan and made appropriate changes before the death of the first spouse to die. Consider speaking with your attorney regarding these issues before it is too late to make changes.
Ms. MacDonald’s practice is limited to Estate Planning, Probate & Trust Administration. Ms. MacDonald maintains her practice in the Santa Clarita Valley at 25115 Avenue Stanford, Suite A-209, Valencia, California. She can be reached at 661-294-6464.
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