With the federal estate tax exemption at a higher level permanently, many investors may be rethinking their estate plan.

At the current exemption level of $5.43 million, a married couple could essentially shelter $10.8 million from federal estate taxes. As Chris Hennessey points out, there are only a small number of estates that exceed that amount. Consequently, most investors may be less concerned with strategies to mitigate federal estate taxes, and more focused on state inheritance taxes and federal income tax.

Planning priorities shift
Chris explains how changes in the portability provision may lead investors to question whether they need to set up a trust.

For residents of states where there is a state inheritance tax, much of estate planning is focused on the local tax. In addition, many investors are seeking planning strategies around federal income tax planning. Gifting is another area of consideration as most investors will not surpass the federal threshold. There may be income tax benefits in gifting while living.

As always, it’s important for investors to prepare the necessary documents for wealth transfer and, with the changes in federal estate tax rules, it may be an opportune time to review existing estate plans.


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