The Internal Revenue Service (IRS) has announced the 2019 limits for gift taxes and estates -- and it's a huge relief for many wealthy seniors who may have been worried about any large gifts they hoped to pass along to their heirs.
In 2019, the annual gift exclusion amount is still just $15,000. However, an individual can now leave $11.4 million to his or her heirs without fear that any of it will be claimed by federal estate taxes or gift taxes after they are gone. Married couples can leave their heirs $22.8 million. The exclusions come as a result of the tax reforms instituted by the Trump administration. Prior to the reforms, the base exemption rate was only $5 million per person.
Many hope the changes to the law will become permanent. It generally reduces the number of estates that fall subject to the so-called "death" taxes by about half. Currently, the law doubling the exemption is set to end with 2025. A permanent exclusion would definitely make it easier for estate planning for those individuals in that dollar bracket.
For now, individuals and couples who have used up their exemptions prior to the increase may want to check with their attorneys to see how they should respond to the changes.
Does this all mean that if your income and assets aren't in the multimillion-dollar bracket that you can skip estate planning altogether? Absolutely not. Everyone should have some kind of basic estate plan that covers what they want to happen to their possessions and who can take charge of decisions if they're unable to make them on their own.
Because no two people are the same, no two estate plans are exactly alike. An experienced attorney can assess your needs and help you develop the right estate plan for you.