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Significant Estate Planning Opportunities for High Net Worth Individuals

With the signing of the Tax Cuts and Jobs Act (the “Act”) by President Trump on December 22, 2017, the most sweeping tax legislation in decades has been enacted.  The Act doubles the estate and gift tax exemption amount to $11,200,000 to those individuals dying in 2018, up from what was to be a $5,600,000 exemption.   As under prior law, the exemption amount will be indexed with inflation.

The Act also maintains the concept of “portability” – the ability of a surviving spouse to receive the deceased spouse’s unused exemption amount, subject to certain conditions.  These are welcome changes to those with substantial net worth; however, as with many provisions of the Act, there is a sunset provision so that on January 1, 2026, the exemption amount reverts to $5,600,000 in 2018 dollars.

Many married couples’ estate plans provide for the establishment of a “Credit Shelter Trust” or “Family Trust” tied to the federal estate tax exemption amount.  Many of these plans were signed when the exemption amount was $1,000,000, or even less.  With the higher exemption amount, these plans may result in all of the assets of the first spouse to die being placed in a Credit Shelter Trust when that may not be the couple’s current intent.

With the increased exemption amount, there are significant planning opportunities for high net worth individuals.  Now is a good time to review your estate plan with your attorney to determine if changes should be made or opportunities exist.

For additional information, please contact KDDK estate planning and tax attorney attorney Mark Samila at (812) 423-3183 or msamila@KDDK.com.

About the Author

Mark S. Samila

Mark S. Samila, a Co-Managing Partner at Kahn, Dees, Donovan & Kahn, LLP, in Evansville, Indiana, is a business attorney, Indiana Registered Civil Mediator and Licensed Certified Public Accountant (Missouri) whose practice includes tax and estate planning, financial services including bank and bond financing, creditors’ rights, workouts and bankruptcy and business law. Mark blends his accounting and financial background with his legal experience. In so doing, he provides legal analysis and also understands and considers the business and financial implications of a client’s legal options.

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