Fedele and Murray, P.C.

17 Walpole Street, Norwood, MA 02062-3318 - (781) 551-5900

Estate Planning in 2018

After a one year hiatus in 2010 when the Federal estate tax was repealed, the law was reinstated as of January 1, 2011 with the exemption being increased to $5,000,000. While originally scheduled to revert to only $1,000,000 on January 1, 2013, as a result of the passage of The American Taxpayer Relief Act of 2012, the exemption will remain at the $5,000,000 amount, adjusted annually for inflation. The 2018 inflation adjusted exemption was to be $5,600,000, but as a result of the passage of the Tax Cuts and Jobs Act of 2017, the exemption is now $11,200,000. The top marginal estate tax bracket remains at 40%. The annual gift tax exlusion as of 2018 is now $15,000 per donee per year.

While the Federal estate tax may not impact everyone, it remains important to address one's estate planning issues regardless of changes, or potential changes, to the law. Of course, for many people, estate planning is a not exactly a "hot" topic. After all, planning for one's demise is not the most pleasant matter to address. As a result, many people procrastinate when it comes to getting their affairs in order. Recent events may give people even more reason to put off planning. With the recent downturn of the economy, the values of retirement accounts, investments and real estate have dropped significantly. Some will use that drop in value to justify putting off estate planning. The fact of the matter is that estate planning remains an important topic for everyone.

Estate planning fundamentally involves planning on how your assets should be disposed of. While minimizing estate taxes should be part of any good estate plan, taxes are not the only concern. Making sure that your assets pass to those family members, friends, and/or charities in the manner that you wish should be the paramount concern. If your goals for disposing of your assets can be accomplished while minimizing estate taxes, even better.

Regardless of what happens with the Federal estate tax law, one must still contend with state estate tax issues.  Many states, Massachusetts being one of them, have enacted their own separate estate tax. See the article on The "New" Massachusetts Estate Tax. The Massachusetts estate tax exemption is only $1,000,000. If the total value of your estate exceeds this latter amount, a Massachusetts estate tax may be due. Keep in mind also that while the effective maximum tax rate in Massachusetts is only 16%, the Massachusetts tax is actually assessed on the entire value of one's estate, not just the excess over $1,000,000.

While more changes to the estate tax laws may be forthcoming, postponing addressing your estate planning objectives is never a good idea. An estate plan should evolve over time, be reviewed periodically, and revised from time to time.