Tax Reform Doubles Estate Tax Exemption

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The Tax Cut and Jobs Act has doubled the estate tax exemption. Individuals and couples who are affected by this law may see increased opportunities to take advantage of these exemptions.

Late last year, Congress passed the Tax Cuts and Jobs Act (TCJA). This is the biggest overhaul to the United States federal tax system in more than three decades. Among other things, the TCJA will have a significant effect on estate planning for some individuals and couples in Washington.

Under the previous tax rules, each individual was entitled to a $5.49 million federal estate tax exemption. The TCJA has substantially increased the individual estate tax exemption, raising it to the level of $11.2 million per individual. This is a significant change that will completely eliminate federal estate tax liability for many individuals and couples in Washington.

In addition to the doubling of the estate tax exemption, the TCJA has also expanded the generation-skipping transfer tax (GSTT) exemption. While many people are not familiar with this exemption, when certain criteria are met, it allows grandparents to make certain tax-free gifts to grandchildren and great grandchildren.

Contrary to the expectations of some, Congress did not make any changes to ‘portability’. The TCJA leaves the same rules regarding portability in place. Portability is a colloquial name that is used to refer to an estate planning concept that was introduced into the tax code in 2011. Essentially, it allows a surviving partner to use the unused portion of their deceased spouse’s estate tax exemption.

Not every individual or couple will be affected by the estate tax reforms. Still, there are many people who will see new opportunities as a result of this law. Renton, WA estate planning attorney Dan Kellogg notes that “Tax issues are an important part of the estate planning process for many Washington residents. With the new law in place, some individuals and couples will need to review their estate plan in order to ensure that it is still the most effective strategy available.”

It should be noted that many of the legal changes within the Tax Cuts and Jobs Act, including the increase in the estate tax exemption and the increase in the gift tax exemption, are set to expire on December 31st, 2025. Of course, that does not mean that these changes will actually expire on this date. There is always the possibility that future legislative acts will make this exemption permanent, extend the expiration date further into the future, or modify the estate tax exemption in another manner.

Contact Info:
Name: Dan Kellogg
Email: Send Email
Organization: Law Offices of Dan Kellogg
Address: 555 W Smith St, Kent, WA 98032, United States
Phone: +1-425-227-8700

Source: PressCable

Release ID: 322791