Looking forward: What 2017 Means to Your Current Will, Revocable Trust and Estate Plan.

In 2012, The American Taxpayer Relief Act (the “Act”) was passed, which implemented the following: (1) the reunification of the estate and gift tax regimes, (2) the $5 million estate, gift and generation-skipping transfer (“GST”) tax exemptions, as increased for inflation, and (3) portability of the federal estate tax exemption between spouses at death.

These are the applicable for the 2017 tax year, effective January 1, 2017:

• In 2017, there is a $5,490,000 federal estate tax exemption (increased from $5,450,000 in 2016) and a 40% top federal estate tax rate.
• In 2017, there is a $5,490,000 GST tax exemption (increased from $5,450,000 in 2016) and a 40% top federal GST tax rate.
• In 2017, the lifetime gift tax exemption is $5,490,000  (increased from $5,450,000 in 2016) and a 40% top federal gift tax rate.
• In 2017, the annual gift tax exclusion is $14,000 (no increase from 2016).

These increased exemptions create opportunities to make larger lifetime gifts, to leverage more assets through a variety of estate planning techniques (such as a sale to a grantor trust) and to shift income producing assets to individuals such as children or grandchildren who may be in lower income tax brackets and/or reside in states with a low income tax rate or no state income tax.

While many estate planning documents are drafted to be flexible, and in general, their overall structure remains unaffected by the increased exemption amounts, if you have had changes in your overall net worth or family structure, I recommend that you schedule a free consultation and have an attorney at Keirnes Law look over your current plan.

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