The New Year is here and that means new estate tax and gifting thresholds! Determined by the IRS by evaluating inflation information, these new limits are crucial to minimizing the impact of taxation on your assets. Here’s some insight from a leading estate planning attorney in New Jersey.
Estate taxes in 2018
This year, these limits were bolstered to ensure a lower impact on estate taxes. For a single person’s estate, taxation will be assessed only if the estate is valued at $5.6 million or more. For married couples, this limit has been set at $11.2 million in combined value, so anything below that won’t face estate taxation.
Gifting in 2018
Gifting thresholds were similarly increased from $14,000 per year to $15,000 per year. This is good news as this is the first increase since 2013. With this new limit, only gifts of over $15,000 will face taxation. There is no limitation on how many individuals you can gift to, so this makes a great way of providing for children, grandchildren, charities and loved ones.
Basic exclusion for estate tax and gifting
The basic exclusion amount for 2018 is set at $5.6 million, up from $5.49 million in 2017, and the generation-skipping transfer tax exemption (GST) is equal to the gift and estate tax exemption amount of $5.6 million for individuals, or $11,200,000 for married couples.
Is estate tax on its way out?
On November 2nd, the tax cuts bill released by the U.S. House of Representatives Committee on Ways and Means paved the way for big changes to current estate taxation. Lauded as a tax cut for the rich, the Tax Cuts and Jobs Act doubles the basic exclusion amount for gift and estate taxes from $5 million to $10 million, from January 1, 2018. This allows a couple to shield up to $22.4 million from taxation and repeals the estate tax and generation-skipping tax in 6 years, as of January 1, 2024.
Gift tax breaks are affected too, keeping the $10 million basic exclusion (adjusted for inflation) intact but adding a new lower top rate of 35% (down from 40%) from January 1, 2023.
Ensure your estate plan is working for you in 2018 – Speak to your estate planning attorney
If you would like further guidance on protecting your real estate assets by creating an irrevocable living trust, LLC or a Last Will and Testament, Frank R. Campisano can provide you with the necessary expert legal advice and professional insight.
In addition, he can also assist you with all other aspects of your estate plan, from drawing up medical directives and Power of Attorney documents to Medicaid planning. For more information on setting up or changing an estate plan, please contact him at the law firm of Sedita, Campisano & Campisano, LLC in New Jersey or visit our website at https://www.scclegal.com/ today.