High net worth individuals in North Carolina are likely aware of the changes that came about with the Tax Cuts and Jobs Act. For one thing, it increased the federal estate tax basic exclusion from $5 million to $10 million. What people may not know is that many of the provisions in the TCJA are set to expire.
Limits of the TCJA
Many of the stipulations in the TCJA are designed to revert to their pre-2018 status in 2025. Some may be overturned depending on what happens in the House and Senate after the 2020 election. It’s important for people with assets to think about what they want to pass on now. This might be the best possible time to make cash gifts to children and grandchildren.
Estate planning is an ongoing process
People with large estates often make use of trusts to pass assets to their spouses and other beneficiaries without paying a tax penalty. Because the tax law will change again soon, it’s a good idea to reconsider any trusts that have already been set up. Some financial advisors are recommending that people add provisions to trusts to make them more flexible.
It’s possible to allow trust protectors to modify the trust. Alternate strategies include allowing beneficiaries to change the trust or making it possible for the assets held in trust to be used for another trust. All of these measures guard against future changes to the tax code. They make it possible for an estate to adapt as needed.
It’s prudent to revisit estate planning when tax codes change, so checking in with an attorney now might prevent headaches in the future. An attorney may help people avoid paying more estate tax than they need to.