The Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law on December 22, 2017. With it came sweeping changes to many different sections of the tax code. One of significance, of course – since this is an estate planning blog, was the Federal Estate Tax Exemption amounts. For 2017, the exemption amounts were $5.49M for and individual and $10.98M for a married couple. Those amounts, under IRS guidance issued in late 2017 prior to the Act’s passage, were set to increase to $5.6M and $11.2M respectively based on the amounts being tied to inflation. The Act changed those plans a bit.
The Act’s Impact on the Federal Estate Tax Exemption
While the change itself without the Act did not occupy much space, the result was significant. For 2018, the Estate Tax Exemption amounts will double to $11.2M and $22.4M respectively. This means that individuals and couples can pass assets with value of up to those amounts, whichever would apply, during their lifetime via gift or at their death via inheritance, without the beneficiary incurring any tax liability. Every dollar above those amounts would be subject to Estate or Gift Tax, whichever would apply.
But There’s a Catch
This is obviously great news for ultra-high net worth families, but it’s far from a permanent change. Since the Act was passed as a budget reconciliation bill, and since Congress plugged in requirements that the individual tax cuts terminate by 2025, the changes to the Estate Tax Exemption will only last until 2025 at the latest without further action by Congress.
So, while this is a significant win for ultra-high net worth families, unless someone is sure to pass away in the next seven year, we cannot in good conscience change long-term tax avoidance strategies to rely on the new Estate Tax Exemption amounts. Most estate planning attorneys will likely advise their clients to keep current tax avoidance plans in place moving forward.
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Author Bio
Paul Yokabitus
Founder & Estate Planning Lawyer
Paul Yokabitus is the founder of Cary Estate Planning, where he helps North Carolina families protect what matters most through wills, trusts, probate, and special needs planning. Known for his “planning, not paperwork” approach, Paul turns complex legal concepts into clear, practical strategies so clients feel informed and confident at every step. He has been recognized as a Business North Carolina Legal Elite attorney and a Super Lawyers Rising Star, and was named to the Triangle Business Journal’s 40 Under 40. A graduate of Campbell University School of Law, Paul lives in the Triangle with his wife, Alix, and their two sons.
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How We Help North Carolina Families
Paul and his team at Cary Estate Planning are fully committed to creating a personalized experience to develop thorough and comprehensive estate plans. They value their clients and go above and beyond to make sure that no details are missed. I would highly recommend Paul to anyone looking to create an estate plan.
I was referred to Paul by my Real Estate Attorney and I could not say enough about how exceptional the client service has been from everyone I spoke to. The communication is prompt and I feel like they really took the time to answer all my questions and set things up exactly as I wanted, but also recommended things to make it easier on my family down the line.
After attending one of Paul’s estate planning seminars, my husband and I knew we wanted Paul to assist us with our estate planning. His honest, professional approach to this necessary part of life put us at ease with the process. We will continue to recommend Paul and Cary Estate Planning.
We had a great experience working with Paul Yokabitus and the team at Cary Estate Planning to set up our Will and Estate Plan. The process was clear and easy, and in the age of COVID, our signing session was very well done, easy, and safe.
The Cary Estate Planning team will make sure that you have the information you need to be confident in your estate planning decisions. I learned so much from videos, a one-on-one in-person consultation, the website, emails, and a newsletter mailed the old fashioned way. The fee is very reasonable given the importance of estate planning. No matter the size or number of your assets, don’t procrastinate like I did!
Paul is a masterful attorney. He’s very good at taking your intentions and defining that into a durable Trust and Will. Best of all he is as simple and plain-spoken as you like. Or as fast as intellectual as you may be. It’s all about your your speed and your desired outcomes. Would strongly recommend this firm.
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