Revisit your plan to avoid unintended consequences and take full advantage of a higher exclusion amount.
There is no doubt that a doubled federal estate and gift tax exclusion amount is good news for many high-net-worth families. But this change – enacted as part of the Tax Cuts and Jobs Act – could have unintended consequences on existing wealth transfer plans. For this reason and more, now is a good time for many families to revisit their plans.
To help with this, Suzanne Shier, chief wealth planning and tax strategist at Northern Trust, provides a framework in this three minute video. She also discusses key considerations for wealth transfer plans and examples of what clients are doing under the new law.
A framework for wealth transfer: Questions to ask yourself
- Can I give?
- Should I give?
- When should I give?
- How and what should I give? Outright or in trust?
Important considerations under the new tax law
- Do not forget about state taxes; state-level estate and inheritance taxes can be significant, and disconnects between federal and state exclusion amounts may exist.
- Timing is everything; consider transferring appreciating assets at death to reduce or eliminate income tax liability when the assets are sold.