Don’t Let New Estate Tax Law Cause Your Family to Pay Unnecessary Capital Gains Taxes

The threshold currently for the federal estate tax is $11.18 million due to the Tax Cuts and Jobs Act of 2017. 99% of Americans will not be subject to estate tax. But this does not mean that the planning one did before the increase is the most tax efficient.

Anything in a person's estate excess of the threshold amount is to be taxed at 40%. Previously, estate planners would advise that assets over the designated amount be placed in a trust. Often a trust would be subject to a capital gains tax, historically around 15-18%. In 2002, the estate tax threshold was $1 million. By comparison, a much larger estate in 2018 could be passed directly to beneficiaries without the worry of the 40% estate tax. Any asset that has been placed in a trust for protection against the estate tax is now being needlessly taxed according to the current capital gains tax.

See Ann Margaret Carrozza, Don’t Let New Estate Tax Law Cause Your Family to Pay Unnecessary Capital Gains Taxes, The Island Now, May 10, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.