As part of the Tax Cut and Jobs Act (the "Act"), passed in December of 2017, the lifetime exemption amount for estate, gift, and generation-skipping taxes was doubled.
For 2018, the lifetime exemption amount for estate and gift taxes of $5.6 million per individual is now $11.2 million under the Act. A married couple can also combine their individual exemptions for a total of $22.4 million, however, doing so is not automatic. The surviving spouse must transfer the first spouse's unused exemption to the surviving spouse by filing an estate tax return for the first spouse, even if no estate tax is due.
This doubling of the exemption amount is good for years 2018 through 2025. This means, without further Congressional action, the exemption amount would no longer be doubled, starting in 2026. Therefore, individuals that are able to, are encouraged to take advantage of their exemption amount now, in case the doubling of the exemption amount ends in 2026.
Separately, the annual gift tax exemption amount has been increased for the first time since 2013. For 2018 it is $15,000, up from $14,000. This is totally separate from the lifetime exemption amount. An individual can give $15,000 to as many individuals as they like in 2018. These annual gifts do not count towards the lifetime exemption amount.
For more information, contact Estate Planning attorney, Jeffrey M. Black, at (616) 458-3994 or email email@example.com.