Monday, December 25, 2017
The recently-signed tax reform legislation doubles the amount individuals can leave to their heirs free from estate tax. At the federal level, an individual can now leave up to $11.2 million to beneficiaries without triggering the 40% tax. States like Maine, Hawaii, Maryland, and Connecticut will match this increase over the next few years as they have tied their state estate tax thresholds to the federal rate. In total, there are seventeen states that still levy an inheritance or estate tax. In those states that have tied their tax rates to the federal rate, the number of taxable estates is certain to decrease dramatically. Phil Hunt, an estate lawyer in Portland, Maine predicts that some of these states are likely to “rethink it rather quickly. I wouldn’t be surprised if they tried to do something retroactively.” For now though, the increased exemption limit means more assets can be passed on without needing to worry about the estate tax. But, this does not warrant complacency when it comes to estate planning. There are still a number of non-tax reasons to plan, including assigning a power of attorney in case of incapacity or choosing a guardian for minor children.
See Ashlea Ebeling, Where Not to Die in 2018, Forbes, December 21, 2017.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.