The Internal Revenue Service announced in mid-November the official estate and gift tax limits for 2019. The estate and gift tax exemption is $11.4 million for an individual, up from $11.18 in 2018. The annual gift exclusion amount remains the same at $15,000.
According to Forbes, the Trump administration tax cuts slashed the number of estates subject to the federal estate tax, by doubling the exception amount from a base level of $5 million per person.
“Permanence (of the doubled exception) would make the score of repeal much cheaper and provide predictability,” said Palmer Schoening of the anti-death tax Family Business Coalition.
In general, experts recommend creating a will once you reach the age of 40.
If you have assets in the six figures or higher, it’s recommended to have a trust in addition to a will, in order to help minimize estate taxes and avoid probate down the line. Keep in mind, unless your estate is valued at more than $5.43 million — or $10.86 million for a married couple — you’re exempt from federal taxes, though recent federal tax legislation could raise the amount you can leave tax-free to your heirs to $22.36 million for married couples.
According to GV News, you should never be complacent and think you do not need to do any estate planning due to large federal tax exemptions. Here are a few non-tax reasons to plan:
- Naming beneficiaries in order to avoid probate
- Naming an agent to act on your behalf under a health care power of attorney
- Appointing an agent to agent on your behalf under a financial power of attorney (if you’re incapacitated)
As a family, you will still be able to save more on your taxes than as an individual. Once you discover all the deductions that are available to you, you can not only ensure a secure financial future for your family, but you’ll have more exposable income, as well.
In addition to potential exceptions, make sure you’re considering educational expenses, medical expenses, relatives, dependents, and qualifying children, and more when handling your taxes this year and in the future.