Estate Tax Law Changes

The estate planning landscape has been marked by change and uncertainty over the years. Under 2001 tax law, the Federal estate tax became progressively generous in the run-up to 2010, when it was phased out completely for a single year. Under the 2010 Tax Relief Act, the Federal estate tax was reinstated. The Tax Cuts and Jobs Act of 2017 doubled the exemption amounts from 2018 to 2025. In 2020, there is a top tax rate of 40% and an exemption amount of $11.58 million, or $23.16 million for married couples.

Early preparation is key to developing appropriate strategies to minimize potential estate taxes and ultimately maximize the amount transferred to your heirs. With the reinstatement of estate taxes, the exemption allows you to transfer $11.58 million to your children or other heirs tax free at death. (Bear in mind that an unlimited amount may be passed tax free to a spouse.) If you are married and your combined assets (including life insurance) surpasses $23.16 million, consider implementing advanced planning tools, such as trusts, to help minimize taxes.


Estate, Gift, and GST Tax Exemptions

Estate Tax Rate Exemption

40%

$11.58 million

Gift Tax Rate Exemption

40%

$11.58 million

GST Tax Rate Exemption

40%

$11.58 million