2018 Summary of Changes to Gift, Estate & GST Taxes

by Wendel, Rosen, Black & Dean LLP

Wendel, Rosen, Black & Dean LLP

The Tax Cuts and Jobs Act of 2017 (Tax Act) substantially increases the exemption amounts for the estate, gift, and generation-skipping transfer (GST) taxes. The Tax Act also retains the income tax basis adjustment on death. This is commonly referred to as the “basis step-up,” although the adjustment may increase or decrease the tax cost basis of a particular asset depending on the asset’s date-of-death value. 

The following provides a summary of the changes to the gift, estate, and GST taxes:

  • Exemptions: The Tax Act doubles the estate, gift, and GST tax exemptions, effective for decedents dying after December 31, 2017, and before January 1, 2026. This means that the exemption amount for estate, gift, and GST tax is approximately $11,200,000 per person. The exemption amount will be adjusted annually for inflation. The tax rate remains at 40% on the value of assets in excess of the exemption.
  • Annual Exclusion: The Tax Act makes no changes to the annual exclusion for gift and GST tax. The exclusion increases to $15,000 in 2018 because of inflation and will continue to be adjusted annually for inflation.
  • Portability: Portability of a decedent’s unused estate tax exemption amount to a surviving spouse is still available.

What Does This Mean for Your Plan?

As a result of these changes, a married couple will now have approximately $22.4 million in estate tax exemption. For some clients, this may result in a simplification of their estate plan; others will need to make significant revisions to ensure that the funding of trusts created at death is consistent with their plan. This is particularly true if their revocable trust relies on the use of marital or GST funding formulas to create trusts at the first or second death. For married couples, if your plan contains substantial differences between what happens to the “marital share” and the “bypass share” at the death of the first spouse, or if your plan creates lifetime GST-exempt trusts for your descendants at your death, it is important that you contact your attorney to review your plan and implement any desired changes.

Future Gifting Considerations

The increase in the gift tax exemption may also make significant lifetime gifts an attractive planning opportunity for some clients. For other clients, this opportunity will be more complicated, because an asset gifted during the donor’s life carries with it the donor’s cost basis rather than the stepped-up income tax basis that the asset would receive if transferred at death. The possibility that the estate, gift, and generation-skipping tax exemptions may be reduced (either under a future Congress or President, or after 2025 when the increased exemption is scheduled to sunset) should also be considered. Your attorney can review your options with you and discuss the benefits and drawbacks of making lifetime gifts. 

Qualified Tuition Plans

Changes have also been made to the use of funds held in 529 plans (qualified tuition plans). Withdrawal of up to $10,000 per year can now be made from 529 plans to pay for elementary and high school education expenses. In addition, taxpayers have the ability to roll these accounts into accounts under the Achieving Better Life Experience Act (ABLE) under certain scenarios. 

Related Articles: 

2018 Summary of Changes to Income Tax for Individuals

2018 Summary of Changes to Income Tax for Corporations and Pass-Through Entities

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Wendel, Rosen, Black & Dean LLP | Attorney Advertising

Written by:

Wendel, Rosen, Black & Dean LLP

Wendel, Rosen, Black & Dean LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.