A New Year is a Good Time to Review Your Existing Estate Planning Documents

Happy New Year to you and your family!

As the new year begins, it is a good time to review your existing estate planning documents.  The most common reasons for updating documents include: (i) law changes, (ii) changes in financial circumstances, (iii) children getting older, and (iv) changes in personal relationships with people that are appointed in various positions in existing documents.

Although no major estate tax law changes have been announced for 2019, I want to provide a few small updates…

  • For an estate of any decedent dying during calendar year 2019, the applicable exclusion is increased from $11.18 million to $11.4 million.  This change increases not only the applicable exclusion amount available at death, but also a taxpayer’s lifetime gift applicable exclusion amount and generation skipping transfer exclusion amount.  This means a husband and wife with proper planning could transfer $22.8 million estate, gift and GST tax free to their children and grandchildren in 2019.   If no new tax law is passed, the increased exclusion amounts are scheduled to expire on December 31, 2025, which would mean a reduction in the exclusion amounts to $5 million plus adjustments for inflation.
  • The estate, gift and GST tax rate remains the same at 40% and the gift tax annual exclusion remains at $15,000.
  • The New York exclusion is scheduled to increase to $5.49 million (up from $5.25 million in 2018), and then will increase with inflation each year going forward.  It is important to note that, unlike the Federal exclusion amount, the New York exclusion amount is not portable, meaning if the first spouse to die fails to utilize his or her full exclusion amount, the surviving spouse will not be able to utilize the first spouse to die’s unused exclusion amount.
  • The New Jersey estate tax was repealed in 2018.  It has not yet been reinstated by Governor Murphy.  It is unclear whether this is an issue that he will address in his first term as Governor.  The New Jersey Inheritance Tax has not been repealed and remains in effect.  This tax only applies when assets pass to someone other than a spouse, parent, child, grandchild, etc.

With 2018 behind us, it is our objective to make sure that your documents are up to date.  Let us help you start off the new year on track.