Updating Estate Plans After Tax Reform: Maximizing Basis and Minimizing Income Taxes

Description

With the latest tax reforms as a catalyst, tax practitioners and taxpayers must take a fresh look at estate plans. The exemption has doubled; we now have portability, and notably, fewer taxpayers are required to file an estate return. Basis rules have not changed. Leaving assets in your estate (or putting them back) could afford significant tax savings. Then again, this all goes away in 2025.

In 2013 there were 2,596,993 million deaths; 11,309 estate returns were filed; 4,699 of these were taxable estates. Estimates for 2018 indicate about 4,000 estate returns to be filed with approximately 1,900 of these being taxable. With the 2018 exemption at $11,180,000 and portability doubling this to $22,360,000, for those with combined gross estates under $22 million the focus shifts from avoiding estate tax to stepping-up the basis of assets and minimizing income tax on the appreciation.

A non-taxable federal estate, however, does not ensure exemption from state tax. In New York, for example, income $1 more than the $5.74 million threshold in 2019 can trigger tax on the entire estate, not just the amount over the exclusion. Tax advisers should revisit estate plans, explore new planning opportunities, and modify existing wills, trusts and FLPs as necessary.

Listen as the panel discusses common estate planning techniques that need to be reviewed, how to implement changes needed, and steps to take to maximize the value of the client's estate, after tax, over the next seven years.