Higher Estate and Gift Tax Limits This 2019
Before the end of last year, the IRS announced the official estate and gift tax limits for 2019, giving a heads up to anyone working on estate planning, or preparing for will contests or probate courts. [Related topic: New York Will Contests]
As of now, the estate and gift tax exemption is $11.4 million per individual, up from $11.18 million in 2018, meaning that you can leave $11.4 million to your heirs and pay no federal estate or gift tax. Married couples can now shield $22.8 million and the annual gift exclusion amount still remains at $15,000.
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The richest of the rich now have new planning opportunities, and the rest of us have received a loud and clear reminder that even if you don’t have a taxable estate, you still need an estate plan.
Trump’s tax cuts shortened the number of estates subject to the federal estate tax as he doubled the exemption amount from a base level of $5 million per person. According to the Tax Policy Center, there were an estimated of 1,890 taxable estates in 2018 compared to 4,687 taxable estates in 2013 reflecting a base $5 million exemption, and 52,000 taxable estates in 2000 when the exemption was $675,000.
The enemies of death tax are trying to make the new doubled exemption amounts permanent but the Trump tax cuts are scheduled to expire by the end of 2025. If the doubled exemption becomes permanent it would make the score of repeal a lot cheaper and it would also offer predictability. Nevertheless, the Republicans’ latest push to make the doubled exemption permanent was hindered, at least temporarily.
While the wealthy can continue to plan around the estate tax to stay below the threshold and avoid the 40% federal estate tax, couples that used all the money of their exemption before the increase have another $440,000 of exemption value to pass on tax-free.