Tax Law Defined® Blog

Should Your Estate Plan Be Revised After Tax Reform?

Should Your Estate Plan Be Revised After Tax Reform?

Tax reform in 2017 increased the exemption against the federal estate tax from about $5,600,000 to about $11,200,000 for each individual ($22,400,000 in the case of a married couple) from now through 2025. This means that there are far fewer families with wealth subject to estate taxation.

In the current environment, with so many families below the estate tax thresholds, protecting assets from creditors, from the claims of a child’s divorcing spouse and from capital gains tax is a bigger concern than estate taxes. The current high exemption environment is scheduled to sunset in 2026, but in the meantime, many couples with non-taxable estates have outdated estate plans.

Capital gain subject to income tax is generally calculated by subtracting the basis of the asset from sale price of an asset. “Basis” is generally the owner’s investment in an asset. Upon an individual’s death, the general rule is that the beneficiary’s “basis” in the assets passing from the decedent (other than retirement accounts) is “stepped up” to the fair market value of the asset at the decedent’s date of death. This “step up” in basis can be a powerful planning tool.

Attorneys at Frost Brown Todd are revising many clients' estate plans that were drafted with the estate tax in mind to provide a "step up" in basis. To learn more about this topic and to view this article in its entirety, click here.

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Attorney Spotlight

Scott W. Dolson is a member of FBT, providing corporate, tax and M&A services to LLCs, corporations and partnerships. This includes tax planning for the formation of closely held businesses, LLCs and FLPs and the structuring of syndicated private offerings.