Maximizing Use of Your Estate Tax Exemption

Adam Schucher
E-mail: amc@katzbarron.com
Phone:
(305) 856-2444
Fax: (305) 285-9227

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Prior to the passage of the new tax law in December 2017, an individual owning assets worth up to $5.49 million could avoid having to pay estate tax at death. Under the old tax law, only .2% of estates owed any estate tax to the IRS. Under the new tax law, the estate tax credit was increased from $5.49 million to $11.2 million, so even fewer estates will have to pay the estate tax. For those who have a taxable estate, every dollar of value in excess of the estate tax credit is taxed at 40%. For example, an estate valued at $21.2 million, would owe $4 million of estate tax after applying the estate tax credit (40% of $10 million of assets in excess of the estate tax credit). If you are one of the fortunate few to have a taxable estate, you should consult with an estate planning attorney to review the advanced estate planning strategies available to minimize your exposure to the estate tax. Even if your estate isn’t taxable based on the current estate tax credit, that estate tax credit is scheduled to revert back to its 2017 value of $5.49 million (increased for inflation) on January 1, 2026. For those individuals that have used most or all of the 2017 estate tax credit, taking advantage of the increased estate tax credit before it disappears in 2026 should be of paramount importance. Failing to take advantage of the increased estate tax credit while this window is open is something you may regret, but not nearly as much as your heirs will regret having to write a larger than necessary check to the IRS. See your estate planning lawyer today!

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