As the end of the year approaches, we believe that individuals should be cognizant of the estate tax provisions within the current administration’s proposed tax plan that may potentially be implemented in the coming year.
When it comes to the estate tax, the administration has been adamant that they intend to eliminate it altogether. However, as will be explained below, the tax plan as currently proposed, does not immediately eliminate the estate tax, and such elimination (if any) may ultimately not be in effect for long. Additionally, even the current House of Representatives and Senate still do not agree on such issue.
Under the House’s proposed bill, the estate tax will be phased out over a six-year period. During this phase-out period, the estate tax exemption would be doubled for the years 2018-2023 to an inflation-adjusted $10 million, from the current $5 million inflation-adjusted amount. (The inflation adjusted exemption for 2018 is set to be $5.6 million). Alternatively, the Senate’s proposal provides for the same increased exemption without the full abolishment of the estate tax in 2024. An additional (obvious) factor here is that if the estate tax is fully eliminated in 2024, a new administration will be incoming, bringing with them the potential for additional changes.
Although over the short-term, the recently proposed tax bill seems to alleviate much of the burden that results from the current estate tax regime, we strongly urge clients to continue with their planning. Please do not hesitate to contact Morris Law Group should you have any questions regarding the proposed tax bill.