Estate Planning

Generally, the goals of estate planning are to provide for financial security in life and to maximize – given the client’s goals and objectives – the estate for family and other heirs following death. To fully leverage estate preservation opportunities and develop strategies to help achieve distribution objectives, we consider:

  • Will and trust design strategies
  • Property ownership alternatives, including the review of titling and beneficiaries to coordinate with your overall plan
  • Estate tax reduction techniques
  • Insurance analysis
  • Qualified plan distribution alternatives
  • Family-gifting strategies
  • Charitable planning

Planning Opportunities from the 2018 TCJA

The Tax Cuts and Jobs Act of 2018 dramatically increased the federal estate tax threshold from $5.6MM to $11.18MM for individuals. Inflation adjustments were retained from the old law, and, in 2019, the limit is $11.4MM for individuals and $22.8MM for married couples. Assets exceeding that limit and subject to the estate tax will face a rate of 40%.  Without further legislative action, this provision will sunset in 2026 back to its earlier level (indexed for inflation) and many states impose their own inheritance or estate tax.

The reversion set to occur in 2026 opens a window of opportunity for those households potentially subject to the federal estate tax. Business owners and households with assets exceeding (or expecting to exceed) the old level of $11.4MM (married couple) should consider using lifetime gifting to take advantage of the current higher threshold.  With the proper techniques, estates subject to taxation may be able to substantially reduce their tax liability.

Other Provisions

  • Portability between spouses has been retained by this Act which means that a spouse’s exemption isn’t lost upon his/her death if portability is elected by the executor.
  • The annual gift exclusion for 2019 is $15,000.
  • The gift tax, GST tax and estate tax remain unified at 40%.
  • Marital and qualified charitable gifts remain unlimited.
  • A federal deduction is allowed for state death taxes.