The New Estate Tax Rules and Your Estate Plan

The New Estate Tax Rules and Your Estate Plan

New to estate tax law was gift and estate tax applicable exclusion portability: generally, any gift and estate tax basic exclusion left unused by a deceased spouse could be transferred to the surviving spouse in 2011 and 2012. The GST tax exemption, however, is not portable. Starting in 2013, the American Taxpayer Relief Act of 2012 (the 2012 Tax Act) permanently extended the $5 million (as indexed for inflation) basic exclusion amount and GST tax exemption and portability of the gift and estate tax applicable exclusion amount, but also increased the top gift, estate, and GST tax rate to 40%. The Tax Cuts and Jobs Act doubled the basic exclusion amount to $11.18 million in 2018 (indexed annually for inflation). The exclusion is $11.4 million in 2019. After 2025, the exclusion is scheduled to revert to its level prior to 2018 and be cut by about one-half. You should understand how these new rules may affect your estate plan.

Estate Planning and Income Tax Basis

Estate Planning and Income Tax Basis

Income tax basis can be an important factor in deciding whether to make gifts during your lifetime or transfer property at your death. This is because the income tax basis for the person receiving the property depends on whether the transfer is by gift or at death. This, in turn, affects the amount of taxable gain subject to income tax when the person sells the property.