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Estate Tax Update

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  “Estate Tax Update” by Attorney Jon J. Gasior  (Audio)

Late in 2017, Congress passed the Tax Cuts and Jobs Act. This new tax law changed a number of income tax laws, but it also changed an important estate tax law. Prior to the Tax Cuts and Jobs Act, an individual could exempt up 5.49 Million dollars before their estate was subject to an estate tax. The new tax law increased the exemption up to 11.2 million.

So what does this mean for the average person?  Over the last decade, the federal estate tax has seen quite a few changes. From the exemption set at 1.5 million in 2005, to being eliminated in 2010, to the exemption being set to $5 million indexed for inflation in 2013. Not only has the federal exemption gone up to over $11 million dollars, only about 15 states have an estate or inheritance tax. The state exemptions still range from about $1 million, as high as $5.5 million.

Over that course of time, many estate planners have tried to take advantage of certain techniques, primarily for married couples. This technique is most often referred to as the A/B trust.

An A/B trust works by allowing the surviving spouse of a married couple to divide the couple’s assets into two trusts. In effect, doubling the estate tax exemption. This can be done for both the federal estate tax, as well as any state estate tax. While this technique is extremely effective and valuable, if the estate does not meet the estate tax threshold, it may be unduly burdensome for the surviving spouse.

If you have set up your estate plan at any time over the last 20 years, it is extremely important to meet with an estate planning attorney to discuss how these changes in estate tax laws have affected you and your planning. It may be that you have unnecessarily complicated planning that can be amended to more suitably accomplish your goals.

Flexibility is important in estate planning and if you have any questions as to whether your estate plan is both flexible and comprehensive to accomplish your goals, consult with your estate planning attorney today.

 

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About Jon J. Gasior, Estate Planning Attorney

His personal experience with family and the problems that resulted from their failure to create an estate plan resulted in his desire to learn more about this area of the law. From his work in the Elder Law Clinic, he further realized the need to plan not only for death, but also for incapacity during their lifetime.