Georgia residents and others may be impacted by the passage of the Tax Cuts and Jobs Act. In addition to making changes to the personal and business tax code, it also affected estate tax law. For instance, individuals are allowed a federal estate tax exemption of $11.18 million. Married couples may be able to combine their individual exemptions for a total of $22.36 million.
While making use of the combined exemption may make sense for some people, this is not necessarily the best play for everyone. For instance, individuals who are married multiple times and have blended families may not want to give their exemptions to a spouse. Those who are being pursued by creditors also may not want to pass their assets directly to a surviving spouse. Instead, it may be best to use a QTIP or bypass trust.
It is important to point out that the increased exemption is scheduled to sunset in 2026. In other words, there could be future changes to federal estate tax exemption amounts. If the exemption goes down, there could be clawback issues to consider. People who have concerns about how this may impact their estate plans may want to hold off on making a portability election. In such a scenario, a bypass trust may be the better estate planning option.
The use of portability, bypass trusts and other estate plan tools may be helpful from a tax perspective. Furthermore, the use of a trust may also help someone keep his or her assets out of an estate altogether, bypassing the probate process when he or she passes on. Individuals who are interested in creating a bypass trust or have questions about their estate plan may want to consult with an estate planning attorney.