Estate planning is a difficult consideration for family and friends, although paying close attention to the process can yield great benefits for heirs and beneficiaries. It is also not a process that should happen only once, as changes to national and state laws may affect plans for inheritances.
New changes to the federal tax code are perhaps the most significant in more than 30 years. This new tax policy may leave changes to estate planning and pre-death gifts that encourage people to make or change their estate plans.
The federal minimum for the estate tax has been doubled in the new legislation, applying an estate tax from the United States government on fortunes over $11.2 million. This exemption is doubled again in the case of married couples when wealth is transferred to the surviving spouse upon the death of the other.
New tax codes also allow an easier transfer of real estate with less exposure to possible capital gains taxes. The "step-up-in-basis" approach to property transfer allows real estate to be valued at the time of inheritance, so possible increases in value will not be taxed at higher levels.
An extra thousand dollars has been added to gift limits as well. Pre-death gifts to family members has risen to $15,000, or $30,000 for married couples. This limit is not linked to inflation like tax exemptions, so it remains up to the United States government to raise it in the future.
Estate planning, property transfers, pre-death gifts and charitable contributions are often made easier with the help of an attorney. Legal representation can reduce risks that an estate could be overly taxed or lose value after estate planning.
Source: Quad-City Times, "Tax law changes spark a need to review estate planning," Tim Gulbranson, Feb. 04, 2018