The tax bill passed by Congress in December of last year, known as the Tax Cuts and Jobs Act (TCJA), was the first revamp of the tax code in many years. One of the major changes made was an increase to the exemption amount allowed from estate tax.
Prior to bill’s enactment, heirs to an estate worth up to $5.6 million were exempt from federal estate tax. That figure has been effectively doubled to a current cap of $11.2 million for individuals and $22.4 million for married couples.
Fifteen states, including Delaware, Pennsylvania, and New Jersey, collect estate tax in some form at the state level. In some states, exemptions are tied to federal limits, while others require legislative action before changes are made.
Lifetime Gifts
Another major change contained in the TCJA is the doubling of the lifetime gift tax exemption. The catch is that the exemption is shared with estate tax, so whatever amount is gifted away under the lifetime tax exemption will be subtracted from the estate tax exemption when the person passes away.
If you plan to leave large gifts to any dependents, friends, or other family, consult with a knowledgeable estate planning lawyer about how this will impact your own estate tax exemption.
Reevaluate Your Estate Plan
Regular review of your estate plan is always a good idea, but many people let this slip to the bottom of their to-do list. As in many other areas of life, it pays to be proactive about something this important.
A good rule of thumb is to review at least every three years, or after a major life event such as:
- A divorce, your own or that of a grown child
- The birth of a child or grandchild
- The death of a family member or the development of a chronic illness or disability
- An inheritance
- The sale of a business
- Your retirement
- A change in tax law
As your circumstances and/or the tax laws change, preserve your peace of mind by scheduling an appointment with your estate planning lawyer to update your will or trust.
Media Wills and Estates Lawyers at Eckell Sparks Provide Skilled Advice for All Aspects of Estate Planning and Administration
If you have questions about how the new tax laws impact your estate plans, contact an experienced Media wills and estates lawyer at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. Whether you have a simple will, complex trust, family dispute, or need help with business succession planning, we can assist you and answer all your questions. To schedule a confidential consultation, call 610-565-3701 or contact us online. With offices in Media and West Chester, Pennsylvania, we serve clients throughout the Philadelphia metropolitan area, including Delaware County, Chester County, and Montgomery County.