September 10, 2019 | Posted in:

3 Tips for Estate Planning in the Post TCJA Era

One major change in The Tax Cuts and Jobs Act was the generous federal estate and gift tax exemption, which doubled from $5 million to over $11 million. Effectively, this means that only
the very affluent will have to pay federal estate taxes until the exemption expires at the end of 2025. How does this affect the need for estate planning?

It really doesn’t. Anyone with significant assets should have an estate plan. That’s because there’s more to it than taxes. Estate planning is a complex process that’s about dividing things, not families, and ensuring that your assets are passed on efficiently. Of course there are taxes to consider. New Jersey and Pennsylvania each have inheritance taxes. In both cases, the percentage paid depends on the relationship between the heir and the decedent and can be as high as 15-16%.

The backbone of estate planning is to get as much out of your estate as possible while you are alive. Here are three ways to make that happen:

1. Establish trust funds

A trust is a legal arrangement in which your assets are entrusted to a third party to handle for your beneficiary. Be aware that trusts are subject to annual income taxes, and the tax rates and brackets are not the same as individuals. There are various types of trusts with different objectives and conditions, so seek professional guidance before establishing one.

2. Take advantage of gifting

In 2019, you can give away up to $15,000 to as many people as you wish and up to $11.4 million in your lifetime without paying a federal gift tax. The lifetime exemption only kicks in when you exceed the annual exclusion amount. If you are married, you and your spouse can take the split gift election and give away as much as $30,000 annually ($15K for each of you) and $22.8 million over your lifetimes.

3. Frontload a 529 plan

This very powerful tool allows you to put five years’ worth of gifts—$75,000—into a qualified 529 plan to finance a child’s college education. Estate planning can help your heirs save time, reduce taxes and minimize conflict and potential ugly court battles. It will protect your assets, and most important, protect your family at a very difficult time in their lives.


This article was published in Alloy Silverstein’s Fall 2019 Newsletter. Click here for more content or to subscribe.


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