For people in Ohio and throughout the United States, the estate planning implications of the new federal tax law could be significant. The law worked to massively increase the exemptions for gift, estate and generation-skipping transfer (GST) taxes. When the Tax Cuts and Jobs Act took effect on Jan. 1, the exemption for all three of these types of taxes doubled up to $11,180,000 for a single individual and $22,360,000 for a married couple. These amounts are also slated to increase each year according to inflation.
These exemptions will remain in place for eight years until they sunset in 2026, when they'll return to their 2017 levels adjusted for inflation. Therefore, in order to achieve the maximum benefit from the tax law, it is important to put an estate plan in place prior to the sunset date. Using these exemptions early on can help to guard assets from future taxation due to later changes.
One important part of an estate planning strategy can be the use of gifting. In particular, making use of trusts for gifting purposes can serve multiple goals, including protecting the assets involved from beneficiaries' creditors as well as putting in place a structure for the assets' future use and distribution. A gift made in trust can be protected from significant future taxation.
An experienced lawyer can recommend an array of appropriate estate planning strategies that reflect the benefits offered by changes in tax law. For example, an attorney may suggest selling assets to grantor trusts or planning for future tax changes for beneficiaries. A thorough review of existing wills, trusts and other estate documents could work in the client's best interests.