Follow Kara Linkedin Twitter Facebook
Email Kara Email
Legal Issues
Jan 16, 2018

The Tax Cuts & Jobs Act’s Impact on Elder Law & Estate Planning

Sponsored Content provided by Kara Gansmann - Attorney, Cranfill Sumner & Hartzog LLP

Love it or hate it, the Tax Cuts and Job Act is now in effect as of Jan. 1. 
 
As pertinent to elder law and estate planning, the act contains important provisions that govern gifting and planning. What follows below are highlights as to how estate plans could be impacted by the Act:
 

Temporary Doubling Of Gift, Estate And Generation-Skipping Tax Exemptions

The Act doubles an individual’s exemptions for gift, estate and generation-skipping (GST) taxes, increasing the exemption from $5 million to $10 million, as indexed for inflation. 
 
In 2018, an individual’s exemption for gift, estate and GST taxes is just under $11.2 million, and a married couple’s exemption is just under $22.4 million. Property transferred in excess of the exemption will be subject to a 40-percent tax rate. 
 
There is currently no provision for the ultimate repeal of these taxes.  The increased exemptions are temporary, however, and will last through Dec. 31, 2025, absent other Congressional action. Barring any other changes, on Jan. 1, 2026, the exemptions will revert to the current $5 million level, adjusted for inflation. These changes create significant gifting opportunities.

 
Tax Basis Rules Remain Unchanged

Just as before, inherited property will receive a stepped-up tax basis, but gifted property will not. Accordingly, a recipient of gifted property will receive the donor’s tax basis and pay more in capital gains taxes if the donor’s cost basis was relatively low, while the recipient of inherited property will receive a “step up” in tax basis equal to the value on the date of death.


Portability Rules Remain In Effect

Portability is the surviving spouse’s ability to use a deceased spouse’s unused estate and gift tax exemption, and it remains unchanged for gift and estate tax exemptions. However, there is no portability for the GST tax exemptions.
 

Expanded 529 Plans

These plans are designed to allow tax-free accumulation of savings for education. The new act allows these plans to distribute income tax-free to institutions of higher education, as well as elementary or secondary schools subject to limits of $10,000 per plan beneficiary per year.
 
This act contains significant tax legislation that offers numerous planning and gifting opportunities for individuals and couples. As a rule of thumb - and in light of these new laws - it is a smart idea to review existing estate planning documents to ensure the documents achieve all possible tax benefits, as well as all non-tax objectives.

Kara Gansmann is an attorney in the Wilmington office of Cranfill Sumner & Hartzog LLP, where her practice encompasses elder law and estate planning. Kara advises individuals and families with estate planning needs and asset protection tactics. In this role, she strategizes with clients to preserve assets for long-term care and to leave legacy gifts to family members. Kara works with elderly clients in need of Medicaid crisis planning and Medicaid applications. As part of her practice, Kara drafts wills, trusts and powers of attorney. In the courtroom, Kara represents clients in the administration of estates, guardianship/incompetency proceedings, and guardianship administration. Kara also litigates estate and trust matters, including will caveats, the modification or termination of trusts, and litigation arising from estate documents or fiduciary roles. She is a member of the North Carolina Bar Association Elder Law and Special Needs Section and serves as co-chair of the CLE Committee for that section.  Kara also serves as a liaison between the North Carolina Bar Association Elder Law and Special Needs Section and the North Carolina Bar Association Estate Planning and Fiduciary Law Section.
 

Other Posts from Kara Gansmann

Wbj insights revised 0510 121615113531
Ico insights

INSIGHTS

SPONSORS' CONTENT
Michaelhiggins 41019104338

Oleander Memorial Gardens Offers New Final Family Resting Places

Michael Higgins - Dignity Memorial
Sherrip2019 insights profile

That’s Who We Are

Sherri Pridgen - Cape Fear REALTORS®
Alyce 4 april242017

Instead of Isolation or Institution, a Third Approach to Senior Housing

Alyce Phillips - Old North State Trust LLC

Trending News

Realtor Submits Site Plans For Luxury Condos, Executive Office Center

Cece Nunn - Aug 22, 2019

Firm's Expansion Expected To Lead To New CRO Jobs In Wilmington

Cece Nunn - Aug 22, 2019

SummerFest 19 To Include Street Food Cook-off At Battleship Park

Jessica Maurer - Aug 21, 2019

Timeline In Motion For Castle St. Redevelopment Project

Christina Haley O'Neal - Aug 21, 2019

Drift Coffee  & Kitchen Now Open At Mayfaire 

Jessica Maurer - Aug 21, 2019

In The Current Issue

Local Distillery Makes A Splash

With Brooke Bloomquist’s background in marketing and special events and her father’s naval career and business prowess, their masterminding...


Thinking Smaller For New Subdivisions

Some homebuilders and developers in the Wilmington area are working on creating smaller subdivisions and infill communities....


Battleship Opens New Tour Section With Food Focus

An area landmark has a new tool for providing insight into the daily lives of the men who served aboard the World War II vessel....

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

WILMA's Leadership Accelerator
Power Breakfast - The H Word (June 13, 2019)
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`