The major estate and gift tax change in the Conference Committee version of the Tax Cuts and Jobs Act of 2017 is a doubling of the integrated estate and gift tax exemption to an inflation adjusted $11.2 million for decedents dying and gifts made in 2018. A married couple has the benefit of two exemptions, or a total of $22.4 million in 2018. The proposed new law also doubles the exemption from the generation-skipping tax in 2018 to $11.2 million for an individual and $22.4 million for a married couple. These exemptions will continue to be adjusted annually for inflation.
These changes sunset after the end of 2025 and (unless there is further legislation to extend them) in 2026 these exemptions will revert to an inflation adjusted amount that is currently estimated to be approximately $6.5 million per person (assuming an inflation rate of two percent between now and then).
If your estate planning documents contain a clause or clauses with a formula related to the US estate and gift tax exemption or the generation-skipping tax exemption, it is recommended that you consult with your estate planning lawyer to review how these changes will affect your estate plan. If your state has an estate tax, you will also want to ask your estate planning lawyer whether it is affected by these changes.
The favorable provisions for business income received from pass through entities will apply to such income which is received by an estate or trust.
The other provisions under current law affecting estates and trusts, such as carryover basis, portability and the estate and gift taxation of non-residents, remain unchanged.