Estate planning in light of tax law changes

There are a number of federal tax law changes associated with the Tax Cut and Jobs Act passed in December 2017 that can be relevant to people in Nevada who are working on their estate plans. The law went even further than previous tax changes to remove gift, estate and generation-skipping transfer taxes from most wealth transfers associated with death. As of January 1, 2018, the exemptions for all three of these taxes rose to $11,180,000 for a single person or $22,360,000 for a married couple. The amounts are also scheduled to rise each year in line with inflation.

While these exemptions will stay in place for eight years, they will sunset in 2026 and revert to 2017 levels with increases related to inflation. In order to benefit from the increased exemptions, it is important to make an estate plan before that sunset date.

Gifting can be an important part of a transfer and estate planning strategy. Using trusts in order to make those gifts can help protect the assets from beneficiaries’ creditors and determine their future use. By using the GST exemption, a gift made to a trust can be protected from future taxation. Trusts can also be structured to determine who is responsible for income taxes. In grantor trusts, the trust creator is responsible for the income taxes. This setup can help the trust’s assets grow while minimizing the amount of the estate.

There are a number of estate planning strategies that can be pursued in light of the tax law changes, including selling assets to grantor trusts and planning for income tax changes for beneficiaries. An estate planning lawyer can work with people to review their wills, trusts and other estate planning documents to help ensure they are maximizing the benefits available under current tax law.

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