Recent Changes in Estate Planning and Gift Tax Laws

Congress continues to debate whether or not to eliminate the estate tax, but other Estate Planning changes in the estate and gift tax law will take effect by January 1, 2018.

The Treasury Department withdrew the controversial proposed regulations that would have eliminated or curtailed many of the strategies the wealthy use to reduce estate taxes. The regulations were aimed at curbing the use of valuation discounts available through family limited partnerships, some types of trusts, and other vehicles. The withdrawal of the proposed regulations means those strategies now can be used as before.

Also, the IRS announced the annual inflation-indexing of some estate planning and gift tax provisions.

For 2018, the estate tax exemption for the estate of any person passing away in 2018 is $5,600,000. A married couple can potentially pass $11.2 million free of estate and gift taxes.

The annual gift tax exclusion is increased to $15,000. That means you can give up to $1,000 to any person you want and the amount will be free of estate and gift taxes. It also won’t use any part of your lifetime estate and gift tax exemption. You can make these gifts to as many people as you want.

Bob Carlson is the editor of the monthly newsletter, Retirement Watch, the monthly video series, Retirement Watch Spotlight, and a weekly free e-letter, Retirement Watch Weekly. In these, he provides independent, objective research covering all the financial issues of retirement and retirement planning.

Mr. Carlson, is also Chairman of the Board of Trustees of the Fairfax County Employees’ Retirement System, which has over $2.8 billion in assets, and has served on the board since 1992. He was a member of the Board of Trustees of the Virginia Retirement System, which oversaw $42 billion in assets, from 2001-2005.