Hyden, Miron & Foster, PLLC Law Blog

Saturday, April 6, 2019

Estate Planning Under the Tax Cuts and Jobs Act

On Dec. 22, 2017, The Tax Cuts and Jobs Act was signed into law, changing estate planning for everyone. Under the new law, there are numerous – albeit complicated – tax planning opportunities, but simple estate planning provisions.

The estate tax exemption was increased to $11.2 million for each individual ($22.4 million for a married couple). Because of this, estate planning can generally be easier. It is important to remember that an estate plan has much more to do than just estate taxes. It should cover things such as how you want your assets managed and distributed when you are gone. In other words: who distributed what to whom?

However, when it comes to asset management, it also, as the name suggests, involves managing your assets during your lifetime. Should you no longer wish to do so independently, you have several other options. For example, you can assign a power of attorney or establish a trust with successor trustees. What is best for you depends on your own personal situation. 

Transferring Your Assets During Your Lifetime


Aside from just estate taxes, you may have some other reasons to transfer your assets to your beneficiaries while you are alive. These transfers can be gifts or transfers in trust, or sales in whole or in part. 

Transferring Your Assets After You Pass Away

All of your assets may be distributed through either a Will or a Trust. At the very least it is generally a good idea for everyone to have a Will. All Wills must be probated through the court. Though the cost of probate can be quite expensive and take a long time, there are ways that you can minimize or effectively even eliminate it. Some of these options include lifetime transfers to a trust for your own benefit (either revocable or irrevocable), owning property as joint tenants with the right of survivorship, or even accounts with pay-on-death beneficiaries. 

Choosing Beneficiaries

When it comes to the people that you would like to receive your assets (the beneficiaries), it is important to keep several factors in mind. You consider the ages of the beneficiaries at present and the ages you expect them to be upon likely time to be received. Along with this come things such as their present and likely financial situation, their marital status and family life, and any other issues specific to that individual person.  

Looking Farther into the Future


If it is your desire to have your assets managed across multiple future generations, one of your options may be a Trust. The variety of Trusts is extensive, but all depend upon the goals and wishes of the grantor. 

Managing Your Trusts


With the new higher estate tax exemptions, Wills and Trusts should be able to achieve what most estate plans desire. The good thing about a Will or Revocable Trust is that while your situation may change, you can plan for it as is, later amending it to fit your then-current situation or outlook. 

You should still stay informed as to what any of your irrevocable trusts say, keeping in mind that they too may serve a good purpose. Additionally, the Arkansas Trust Code will now even allow amendments or termination to irrevocable trusts, so long as the grantor(s) and all beneficiaries agree

Estate & Gift Taxes

The higher estate & gift tax exemption of $11.2 million expires in 2026. Should Congress forgo renewal, the old exemption level of $5.4 million per person will take effect once again. Because of this, now is a good time for people in the taxable estate range to take full advantage of the increase. It is important to bear in mind the tax’s date of expiration when deciding how you choose to distribute your assets. 

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