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The Effect of the 2018 Tax Cuts and Jobs Act on Your Existing Estate Plan

Posted by Maria N. Jonsson | Mar 14, 2018 | 0 Comments

Effective on January 1, 2018, the federal Tax Cuts and Jobs Act substantially changed estate tax laws. Among other things, the Act increased the estate tax exemptions to $11.2 million per individual ($22.4 million for a family), which may significantly impact existing estate plans. This means that your estate planning documents may no longer accomplish what you intended, and a revision may be very much in order.

For example, now that the estate tax exemption is significantly higher ($22.4 million for a family), for a lot of families it makes sense to revise an A-B (credit shelter) Trust to take advantage of the step-up in cost basis for assets at the first death (which does not occur under an A-B Trust structure). By simplifying such a Trust, several important goals can be accomplished:

  1. Allow for part or all of the credit shelter trust assets to be included in the surviving spouse's estate to take advantage of the step up in cost basis at the first death;
  2. Eliminate the need (and cost) for the Surviving Spouse to conduct a trust administration on the first death.
  3. Leave all assets under the complete management and control, and fully available to the surviving spouse.

A related benefit of reviewing an estate plan is making sure that all assets that should be titled in the Trust are indeed owned by the Trust, especially at the death of one spouse. Having assets titled in a deceased person's name alone may trigger Probate even when a Trust exists. Making sure that Pour Over Wills are in place is another way to protect against the expense and complexity of Probate.

Contact The Law Offices of Maria N. Jonsson, Trusts & Estates at (424) 383-8445 for assistance from a knowledgeable trust and estate attorney.

About the Author

Maria N. Jonsson

Founding Attorney


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