The tax bill, passed by the House and Senate yesterday, temporarily doubles the annual exclusion amount (the exemption) for estate, gift and generation-skipping taxes from the $5 million base, set in 2011, to a new $10 million base, good for tax years 2018 through 2025. The exemption is indexed for inflation, so it looks like an individual can shelter $11.2 million in assets from these taxes. Another federal estate law provision called portability lets couples who do proper planning double that exemption. So, a couple could exclude $22.4 million. Watch out: The law’s sunset means that, absent further Congressional action, the exemption amount would revert to the $5 million base, indexed.
In this window, the tax bill offers enormous planning opportunities for the rich. “Any client who can afford to do so will want to use their exemption for gifts, in case it actually does sunset,” says Kaufman. For couples, this would benefit anyone with $11 million or more in assets. Under current law, each person for 2018 had a $5.6 million exemption. Now each person will have an $11.2 million exemption. So, a couple has an extra $11.2 million to gift or transfer at death. “It’s better to give now while the law is certain,” she adds.
Final Tax Bill Includes Huge Estate Tax Win For The Rich: The $22.4 Million Exemption