With all the media coverage in the last couple of months, you have certainly heard at least tidbits about the new Tax Cuts and Jobs Act (Act), signed by the president in December. One of the most important provisions of the Act for high net worth (HNW) families is the increased exemption amounts for estate, gift and generation-skipping transfer (GST) taxes.
HNW Families Should Take Advantage of the Increased Tax Exemptions for Gifts
Wealthy families should look at ways to take advantage of the significantly higher estate, gift and GST tax exemptions contained in the Act. In fact, if you have not made prior taxable gifts, you can gift up to:
This also means that if you have already used your full gift tax exemption in previous years, you are still eligible to transfer an additional:
Keeping in mind that the Act sets an expiration date of December 31, 2025, for the increased exemptions (and noting that any upcoming change in political power could hasten a decrease in exemption), your ability to benefit from these changes is quite possibly a limited-time offer. In 2026, the lower $5,000,000 exemption (adjusted for inflation) is scheduled to return.
HNW Families Should Utilize Annual Exclusion Gift Strategies
Another opportunity for giving (which doesn’t require incurring a gift tax or using any of your gift tax exemption amount) is through Annual Exclusion Gifts. The amount that a person can give annually to another person (or to as many people as desired) has increased under the Act to $15,000 per donee. In other words, a donor can give as many gifts valued at $15,000 to as many donees as he or she wishes, and a married couple could double their gifts to give $30,000 per donee. While it is easiest to give gifts of cash directly to adult donees, it is also possible, under certain circumstances, to make such gifts using non-cash amounts, in trust or to minors.
If you are making annual exclusion gifts to minors, you have several options, including:
HNW Families Gain Tax and Other Benefits from Giving Now Rather Than Later
Wondering about Other Benefits of Tax Reform for HNW Families?
This Act contains a variety of changes that can affect your wealth and business decisions this year. Don’t hesitate to contact your Warner attorney, or an attorney in our Private Client and Family Office practice, including this blog post’s author, Laura Jeltema, or our practice chair, Mark Harder, for assistance.
