Impact of US tax reform on inheritance tax
The major estate and gift tax change in the Conference Committee’s version of the Tax Cuts and Jobs Act of 2017 is the doubling of the built-in estate tax exemption. estates and gifts at $11.2 million adjusted for inflation for deceased persons and gifts made in 2018. A married couple has two exemptions, totaling $22.4 million in 2018 The new bill also doubles the generation-skipping tax exemption in 2018 to $11.2 million for an individual and $22.4 million for a married couple. These exemptions will continue to be adjusted annually in line with inflation.
These changes will end after the end of 2025 and (unless there is new legislation to extend them) in 2026 these exemptions will revert to an inflation-adjusted amount which is currently estimated to be around 6 $.5 million per person (assuming a 2% inflation rate from time to time).
If your estate planning documents contain a clause or clauses with a formula related to U.S. estate and gift tax exemption or generation skip tax exemption, it is recommended that you consult with your planning attorney. to consider how these changes will affect your estate. plan. If your state has an estate tax, you’ll also want to ask your estate planning attorney if they’re affected by these changes.
The favorable provisions for business income received from flow-through entities will apply to such income that is received by an estate or trust.
Other provisions of the current law relating to estates and trusts, such as the basis for deferral, portability and taxation of non-resident estates and gifts, remain unchanged.