What do the 2018 Tax Changes Mean?

What do the 2018 Tax Changes Mean?

The new estate tax law stipulates that a single person could die owning up to $11.2 million without paying the dreaded death tax and for married couples the amount has been increased to $22.4 million, if a timely portability election was made after the death of the first spouse to die.  Both of these changes went into effect January 1, 2018.

As with anything having to do with taxes, caution needs to be taken.  Lack of attention to the new details in the law can lead to misapplication of the changes which would create significant tax consequences for the beneficiaries of the estate as it relates to gifting.

Especially important for those tracking the amended estate tax law, is to be aware that the new version will leave in place the laws that stipulate; when a person dies,  the cost basis of the assets – not including IRAs and retirement plans, of course – would be increased to the value of the asset at the date of the owner’s death.  This is referred to as a step up in basis; thus the capital gain or profit element, created in the assets overtime, is then forgiven at the time of the owner’s death.

However, any misunderstanding that leads to misapplication of these laws could rain this new benefit and lead to significant taxes due.

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At Ketra A. Mytich Ltd. our practice is devoted entirely to serving clients throughout Peoria, IL and the Chicago area in Estate Planning, Business Planning, Asset Protection and Elder Law Planning.