New Power Generation Inc .
NPG Financial Services Inc.
7726 Winegard Rd, Suite 17
Orlando, FL 32809
(407) 929-1684
npgfs1@gmail.com chrislopez@npglife.us

Estate Read Time: 3 min

Revising Estate Strategy Assumptions

When the rules of the game change, tactics should follow in response to the new landscape. While estate tax exemptions have ridden an uncertain roller coaster in recent years, the rules appear to be stabilizing after the passing of the Tax Cuts and Jobs Act, prompting many to reconsider estate strategies.1

In 2017, Congress raised the estate and gift tax exemption to $11.2 million, doubling the $5.6 million that previously existed. In 2021, the estate and gift tax exemption is $11.7 million.2

This exemption increase means that potentially hundreds of additional American households may be able to pass on their assets free of estate taxes. It also means that individuals may want to revisit their current approach to estate management.

Changes in Gift Strategies

One of the objectives of gifting assets is to manage taxation on an estate's future growth. However, this strategy comes at the cost of losing the tax advantage of the step-up in cost basis attached to inherited assets. Since more assets are excluded from the estate tax, the need to gift assets for tax purposes may no longer be necessary.

For many estates, there may now be no reason to gift assets during a lifetime, unless there is a present need with a family member.

Joint Ownership of Assets

An individual may want to consider re-titling assets to joint ownership with a spouse to take advantage of the step-up when the first spouse dies, which may save capital gains taxes when the asset is subsequently sold by the surviving spouse.

Rethinking Trust Strategies

Spouses no longer need to create or maintain a trust in order to take full advantage of both spousal exemptions, since the surviving spouse is now able to claim the deceased spouse’s exemption. Indeed, previously established trusts may actually raise tax bills by missing out on the step-up.3

Creating an estate strategy is complex and should be done with the assistance of a tax or legal professional. Suffice it to say that these recent changes represent a good reason to revisit your existing approach to estate management.

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
2. IRS.gov, 2021
3. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Is it Too Late to Plan for Retirement?

Is it Too Late to Plan for Retirement?

These financial strategies can get you on track even if it feels too late to plan for retirement.

Yours, Mine, and Ours: Estate Strategies for Second Marriage

Yours, Mine, and Ours: Estate Strategies for Second Marriage

Second marriages are a trigger event to revisit any existing estate strategies.

The (Other) Talk: Preparing Your Parents for Retirement

The (Other) Talk: Preparing Your Parents for Retirement

For much of our lives, our parents are the ones who have to bring up uncomfortable topics. (Just think back — and squirm — to their birds and bees talk. Awkward, right?) But once we become adults, sometimes it’s our turn to start sensitive conversations.

 

Have A Question About This Topic?







Thank you! Oops!

Tax-Advantaged Health Care Planning for Retirement

Heading into retirement with confidence is easier if your planning includes steps to minimize taxes, especially as it relates to health care planning.

4 Things to Consider While You’re Planning When to Retire

As the decision to retire approaches, you’ll find the choice of when to retire is rarely black and white.

Assess Life Insurance Needs

How to help determine life insurance needs to provide for your family after you pass away.

View all articles

Taxable vs. Tax-Deferred Savings

Use this calculator to compare the future value of investments with different tax consequences.

Paying Off a Credit Card

Enter various payment options and determine how long it may take to pay off a credit card.

Comparing Mortgage Terms

Estimate the total cost in today's dollars of various mortgage alternatives.

View all calculators

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

View all presentations

Charitable Giving: Smart from the Heart

Do you have causes that you want to support with donations?

Retirement Redefined

Around the country, attitudes about retirement are shifting.

Coaches

Coaches have helped you your whole life, in ways big and small. We’d like to be one of them.

View all videos