Estate Planning Strategies: How to Take Advantage of the New Federal Tax Reform,

The passage of the Tax Cuts and Jobs Acts (TCJA) created major changes in the tax code that affect income taxes, businesses, and estate planning. Though many of the provisions are beneficial to taxpayers, some of these benefits may only be temporary. TCJA provisions relating to the federal estate, gift, and generation-skipping exemptions are designed to sunset on January 1, 2026, when the thresholds will revert to their 2017 levels. This potential for reversion without some congressional intervention makes it incredibly important for individuals to take advantage of the increased exemptions prior to the sunset date.

The most evident planning opportunity under the new tax laws involves full and early use of the higher exemptions limits. Like any gifting strategy, all future appreciation and income attributable to a gifted asset avoids future estate and gift taxation. Another planning technique involves the use of trusts. By creating a grantor trust, a settlor may make tax-free gifts to trust beneficiaries by payment of the income taxes incurred by the trust.

See Gregg M. Simon, Gregory B. Mann, & Luke Harriman, Estate Planning Strategies: How to Take Advantage of the New Federal Tax Reform, National Law Review, February 21, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.