ARTICLE: Tips for Preparing for a Possible Estate Tax Change

Tips for Preparing for a Possible Estate Tax Change

Are you concerned about the buzz surrounding potential estate tax changes? The good news may be that the federal estate tax is unlikely to impact the majority of Americans, even if the exclusion is slightly reduced from its current floor of $11.7 million per individual or $23.4 million per married couple. If, however, you are still concerned, consider taking into account the following three tips for preparing for a potential estate tax change.

1. Consider a Trust. An irrevocable trust, such as a Spousal Lifetime Access Trust (SLAT) or Intentionally Defective Grantor Trust (IDGT) may be a good way to reduce the size of your taxable estate. Funding an irrevocable trust does require you to give up control over the money or assets you put into trust, so be sure this is something you can handle before going this route. A qualified estate planning attorney will be able to advise you as to what type of trust may suit your family’s needs.

2. Take Advantage of Annual Gifting. Currently, the federal gift tax has an annual exclusion of up to $15,000 per individual giver or $30,000 per married couple, per recipient. What this means is that you can give that amount to any person you choose every year without any tax consequences for you or for them. If you have an estate that might be captured by a lower federal estate tax limit, but you are looking to reduce it by an amount under one million, this might be a cost effective way to transfer your assets. If you have two children and four grandchildren, you can gift up to $180,000 per year by gifting $30,000 to each of them. That means in five years time you will have gifted $900,000 and reduced your taxable estate by the same amount.

3. Remember Nothing Is Guaranteed. Keep in mind that no change is guaranteed with respect to when it will arrive or how long it will last. You may wish to avoid taking drastic measures, because it is entirely possible that the estate tax rate will change many more times over your lifetime, unless you are already in your later years. Your estate planning attorney can advise you more on moderate measures that allow for flexibility should rates decrease in future after increasing in the present.

For assistance navigating potential estate tax changes on the horizon, please reach out to our office to schedule an appointment.

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We at Roth Elder Law, PLLC, believe in providing services in a way that clients can easily understand and meaningfully participate in designing and maintaining their estate plan for their loved ones, as well as be assured that their plan will be administered according to their wishes.