The Tax Cut and Jobs Act (TCJA) legislation that was passed in 2017 contained many considerations for taxpayers including changes to the alimony laws and changes in business tax rates in Washington. Of concern to most people may be the change in the gift tax and how that can enable one to potentially reduce the amount of estate tax that may be owed. It may prompt one to take a further look at one's estate planning goals.
Under prior law, the amount one could gift to children or grandchildren was in the neighborhood of $650,000. Under the TCJA, the gift amount is increased to over $11,000,000 per individual. It is important to know that this is not a permanent change and will expire, or sunset, in 2025. At that time the gift rate is scheduled to return to the neighborhood of $650,000.
This is important because it enables people with sizable estates to make gifts to family members while the grantors are still living and it enables them to at the same time reduce the amount of estate taxes that may be due. Gifts can include money for college or a downpayment on a house. The grantors get the added benefit of being able to see the their heirs benefit from the bequests.
Estate plans should be reviewed with some regularity to take advantage of certain aspects of tax law. Other issues to address and keep updated in estate planning documents include care for minor children in the event of one's death, estate structure for probate reasons and health care directives just to name a few. A comprehensive review of an estate plan with a professional in Washington can help to ensure that one's final wishes will be successfully carried out.