2018 Tax Law - Estate Plan considerations?

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Theseus
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2018 Tax Law - Estate Plan considerations?

Post by Theseus » Mon Jan 01, 2018 5:28 pm

Hi

What changes would you make to your estate plan based on the new tax law?

For those that already have their estate plan in place what would you have done differently if the new tax law was effective when you originally set it up?

E.g. for those that were affected by prior estate tax exemption limit what would you do differently if your estates are not higher than $11.2 million per person ( $22.4 million for couple)?

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Mel Lindauer
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Re: 2018 Tax Law - Estate Plan considerations?

Post by Mel Lindauer » Mon Jan 01, 2018 6:00 pm

Theseus wrote:
Mon Jan 01, 2018 5:28 pm
Hi

What changes would you make to your estate plan based on the new tax law?

For those that already have their estate plan in place what would you have done differently if the new tax law was effective when you originally set it up?

E.g. for those that were affected by prior estate tax exemption limit what would you do differently if your estates are not higher than $11.2 million per person ( $22.4 million for couple)?
I'm not a lawyer, but I wonder if it would make sense to craft the legal document(s) to state "maximum tax-free exemption allowed by law" rather than stating an absolute dollar figure which would require a change in the document(s) every time the figure changed?
Best Regards - Mel | | Semper Fi

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HueyLD
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Re: 2018 Tax Law - Estate Plan considerations?

Post by HueyLD » Mon Jan 01, 2018 6:01 pm

Mel Lindauer wrote:
Mon Jan 01, 2018 6:00 pm
Theseus wrote:
Mon Jan 01, 2018 5:28 pm
Hi

What changes would you make to your estate plan based on the new tax law?

For those that already have their estate plan in place what would you have done differently if the new tax law was effective when you originally set it up?

E.g. for those that were affected by prior estate tax exemption limit what would you do differently if your estates are not higher than $11.2 million per person ( $22.4 million for couple)?
I'm not a lawyer, but I wonder if it would make sense to craft the legal document(s) to state "maximum tax-free exemption allowed by law" rather than stating an absolute dollar figure which would require a change in the document(s) every time the figure changed?
Exactly.

LarryAllen
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Re: 2018 Tax Law - Estate Plan considerations?

Post by LarryAllen » Mon Jan 01, 2018 6:16 pm

HueyLD wrote:
Mon Jan 01, 2018 6:01 pm
Mel Lindauer wrote:
Mon Jan 01, 2018 6:00 pm
Theseus wrote:
Mon Jan 01, 2018 5:28 pm
Hi

What changes would you make to your estate plan based on the new tax law?

For those that already have their estate plan in place what would you have done differently if the new tax law was effective when you originally set it up?

E.g. for those that were affected by prior estate tax exemption limit what would you do differently if your estates are not higher than $11.2 million per person ( $22.4 million for couple)?
I'm not a lawyer, but I wonder if it would make sense to craft the legal document(s) to state "maximum tax-free exemption allowed by law" rather than stating an absolute dollar figure which would require a change in the document(s) every time the figure changed?
Exactly.
Only very poorly written documents would have the exact figure. Just about every one I have ever seen deals more with a variable number as you describe. Tax laws have been changing for as long as there have been tax laws.

bsteiner
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Re: 2018 Tax Law - Estate Plan considerations?

Post by bsteiner » Mon Jan 01, 2018 8:20 pm

The new law hasn't even been in effect for 24 hours yet, so as people have a chance to think about it we may have a better sense of what people will do.

At the high end, some people will give away another $5.6 million ($11.2 million for a married couple) to take advantage of the increased exclusion amount.

While there's no portability for the GST exemption or in most states for the state estate tax, I think some couples who might end up over $11.2 million but won't end up over $16.8 million, live in a state with no state estate tax and whose children will need some money so that one GST exemption is sufficient may leave their estates to each other to get another basis step-up at the surviving spouse's death rather than creating a credit shelter trust.

People with spouses who are elderly or in poor health may create lifetime QTIP trusts to take advantage of the spouse's estate tax exclusion amount and GST exemption.

letsgobobby
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Re: 2018 Tax Law - Estate Plan considerations?

Post by letsgobobby » Mon Jan 01, 2018 8:23 pm

bsteiner wrote:
Mon Jan 01, 2018 8:20 pm
The new law hasn't even been in effect for 24 hours yet, so as people have a chance to think about it we may have a better sense of what people will do.

At the high end, some people will give away another $5.6 million ($11.2 million for a married couple) to take advantage of the increased exclusion amount.

While there's no portability for the GST exemption or in most states for the state estate tax, I think some couples who might end up over $11.2 million but won't end up over $16.8 million, live in a state with no state estate tax and whose children will need some money so that one GST exemption is sufficient may leave their estates to each other to get another basis step-up at the surviving spouse's death rather than creating a credit shelter trust.

People with spouses who are elderly or in poor health may create lifetime QTIP trusts to take advantage of the spouse's estate tax exclusion amount and GST exemption.
If a couple gives away $11.2 million now, then the estate tax exemption returns in 2025 to its previous (2017) level, will that couple have used up its entire exemption?

bsteiner
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Re: 2018 Tax Law - Estate Plan considerations?

Post by bsteiner » Mon Jan 01, 2018 8:53 pm

letsgobobby wrote:
Mon Jan 01, 2018 8:23 pm
bsteiner wrote:
Mon Jan 01, 2018 8:20 pm
...
At the high end, some people will give away another $5.6 million ($11.2 million for a married couple) to take advantage of the increased exclusion amount.
...
If a couple gives away $11.2 million now, then the estate tax exemption returns in 2025 to its previous (2017) level, will that couple have used up its entire exemption?
Ignoring inflation adjustments, yes.

I said "another $11.2 million" since people at the top presumably used their exclusion amounts under prior law. If they didn't, they can give away $22.4 million now.

Theseus
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Re: 2018 Tax Law - Estate Plan considerations?

Post by Theseus » Wed Jan 03, 2018 4:03 pm

Thank you. I am sure as the law gets interpreted and we get more details there could be other things to consider. Please post anything else you come across.

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