Estate Planning: Estate, Gift and GST Tax Updates for 2017

Estate planning documents are generally drafted to be flexible enough that increased exemption amounts do not affect their overall structure. But in certain circumstances, there may be occasions when updating your documents with an estate planning professional at Cohen & Burnett would be beneficial. Below are some things to consider as we enter 2017.

Tax Updates and Estate Planning Opportunities for 2017

Thanks to The American Taxpayer Relief Act of 2012, the $5 million generation-skipping, gift, and estate tax exemptions are permanent, but are adjusted for inflation. Increased exemptions may create numerous opportunities, such as:

• Shifting income-producing assets to children or grandchildren in lower income tax brackets or to those who live in states with no state income tax or lower income tax rates.
• Creating larger lifetime gifts
• Leveraging more assets using estate planning techniques, such as a sale to a grantor.

Inflation Adjustments Between 2016 and 2017

• The federal estate tax exemption increased from $5,450,000 in 2016 to $5,490,000 in 2017. There is a 40% top federal estate tax rate.
• The generation-skipping transfer (GST) tax exemption increased from $5,450,000 in 2016 to $5,490,000 in 2017. There is a 40% top federal GST tax rate.
• The lifetime gift tax exemption increased from $5,450,000 in 2016 to $5,490,000 in 2017. There is a 40% top federal gift tax rate.
• The annual gift tax exclusion remains the same in 2017 at $14,000.

Things to Consider

Although the estate tax exemption is portable between spouses at death, the GST tax exemption is not. The majority of states that maintain separate state estate tax regimes do not allow portability. If you reside in one of these states, several estate planning techniques become more complicated and arduous.

State-Specific Estate Tax Guidance from Cohen & Burnett

Contact Cohen & Burnett for information on your specific state’s estate taxes and to discuss what estate planning options would be most beneficial if your state has limits on portability. For instance, if you live in a state with a state estate tax, you may be able to add provision to your documents that could save you from some state estate taxes in the event of the death of the first spouse.

To discuss these matters with a tax and estate planning professional at Cohen & Burnett, visit our homepage today.

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