The Dayton Law Firm, P.C.

The Tax Cuts and Jobs Act; a brief update

As many have probably heard, Congress just passed its long awaited tax reform bill, known as the Tax Cuts and Jobs Act. More complete summaries of the updates can be found around the internet. The one which we have found easiest to read through is provided by Northern Trust Company.

The big takeaway for estate planning is that the Gift, Estate, and Generation Skipping Transfer Taxes (also called "transfer taxes") are all still in place, but with almost doubling the individual lifetime exemptions. This means that, where before there was no transfer tax for an individual until about $5.5 million and couples until about $11 million, now there is no transfer tax for individuals until $10 million and couples until $20 million. Since there is no transfer tax until those amounts, capital gains focused tax plans are where planning should be considered for most people. This is a much smaller change than some of the proposals. In short, the laws remain similar to how they have been since 2013, only applying to fewer taxpayers.

Luckily, anyone who has done or reviewed an estate plan with us in the past few years is likely still okay. If you are unsure, early 2018 is a great time to have your situation and plan looked at. Now that we know what the laws will look like for the foreseeable future, we can (for the first time in more than a year!) properly provide guidance for people looking to plan to pay fewer taxes.

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The Dayton Law Firm, P.C.
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