Many of us have been trying to make sense of how the new federal tax law will affect estate planning. Here’s what we know so far: the federal estate & gift tax exemption (from paying any taxes) limit has been raised from 2017 when it was $5.49 million per individual ($10.98 million per couple). The tax bill, passed by the House and Senate, temporarily doubles the exemption amount for estate, gift and generation-skipping taxes from the $5 million base, set in 2011, to a new $10 million base, good for tax years 2018 through 2025. The exemption is indexed for inflation, so it looks like an individual can shelter $11.2 million in assets from these taxes. Another federal estate law provision called portability lets couples who do proper planning double that exemption. So, a couple could exclude $22.4 million for 2018.

SO WHY HAVE A ESTATE PLAN? This exemption goes away in 2025 and goes back to $5 million. There are planning and gifting opportunities for those who may be over the $5 million and who may die after 2025. No crystal ball is needed though to use some clever planning strategies to accomplish lifetime gifting

• Making gifts to existing or new irrevocable trusts, including generation-skipping trusts
• Leveraging gifts to support the funding of life insurance or existing sales to trusts and
• Pairing gifts with philanthropy (such as a charitable lead trust).

For those who will not be near the threshold either before or after the new higher exemption sunsets there is still the advantage of stepping up the tax basis on your old A/B trust, privacy and completeness, no need to go to court and pay costly probate fees. And the other elements of a good estate plan should be there for peace of mind: Durable Power of Attorney, Healthcare Power of Attorney and proper titling/deeding of property to avoid administration after death.

Warning: Don’t get complacent and think you don’t need to do estate planning because of the bigger exemptions. There are still lots of non-tax reasons to plan, like naming a guardian for your minor children and an agent to act on your behalf under a financial power of attorney if you’re incapacitated.

Estate planning is about individual priorities, options and knowledgeable, personal participation.

Rochelle J. Schneider, P.C., Attorney at Law, Executive MBA, can help.