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Tips for Conducting Estate Planning Under The New Tax Laws


Many are relieved that the tax season is over for the year. However, just because it’s over and you’ve filed your taxes doesn’t mean that now isn’t a good time to review your tax and estate-based planning. President Donald Trump signed a tax bill into law on December 2017 that changes things up in terms of estate planning. The new tax law is called the Tax Cuts and Jobs Acts. While the tax law will positively impact financial and tax-based planning, it also impacts estate planning as well. What are some basic principles to consider when thinking about how the new tax plan might affect your estate planning?

What Did The New Tax Law Change? 

The New Tax Cuts and Jobs Act doubled the exemption for federal estate tax. Thus, most estates will not need to pay federal estate tax. More precisely, individuals now enjoy an $11.18 million federal estate tax exemption. Married couples enjoy a $22.36 million exception. Both figures will adjust for inflation. Those estates that are still subject to the estate tax will pay roughly 40 percent in federal taxes.

Creating a Trust May Be Beneficial For Your Surviving Spouse 

It is important to note that these sharp increases in federal estate tax exemptions will return to $5 million (inflation-adjusted) at the end of 2025. If your estate is smaller than $11.4 million for 2019, you may want to transfer your whole estate to a credit shelter trust. In this type of estate plan, when the first spouse passes away, a specific number of assets will pass to a credit shelter trust. After that, they flow to the spouse. In this scenario, the surviving spouse never takes control of the specified assets. Thus, the assets do not become part of the surviving spouse’s estate.

You May Want to Add Flexibility To Your Estate Plan And Help Your Spouse 

As mentioned earlier, in 2025, the federal tax exclusion amounts will once again be reduced. For this reason, adding flexibility to your tax plan could benefit you. You could allow beneficiaries of your trust to make changes. For example, if your two children are your two beneficiaries and you are giving them each 50% of your assets.

You could change the terms of the trust to allow the beneficiary to change the percentages each beneficiary receives. Another idea is to name a trust protector. A trust protector would have the ability to change the physical location of trust assets or direct the trustee’s actions.

Whatever Your Tax Based Estate Planning Needs, We Are Here To Help 

Are you concerned about your estate plan in light of the recent changes to the tax law? Perhaps you’re wondering whether or not your estate plan will make sense when the federal tax estate exemption lowers again.

Skilled Pompano Beach estate & trust litigation attorney Mark R. Manceri, P.A. has years of experience helping people create estate plans that avoid estate taxes as much as legally possible. Contact his office today to set up a consultation.


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