Estate and Gift Planning Under the New Tax Law

by Stoel Rives LLP

Stoel Rives LLP

The Tax Cuts and Jobs Act of 2018 went into effect on January 1, 2018. The new law makes some changes to key estate planning-related provisions. Except as otherwise noted, these changes are effective now and will sunset at the end of 2025, unless changed in the future by Congress. Among these changes are:

  • Increased Applicable Exclusion Amount and GST Exemption. The new law doubles the estate and gift tax applicable exclusion amount, from $5 million to $10 million, for gifts made after and estates of decedents dying on or after January 1, 2018, and before January 1, 2026. By increasing the applicable exclusion amount, the new law automatically increases the generation-skipping transfer tax exemption to the same amount. Because these numbers are indexed, the actual exemptions for 2018 are approximately $11.2 million for individuals and $22.4 million for married couples. When the law sunsets at the end of 2025, the exemption amount will revert to 2017 levels (adjusted for inflation).
  • Cash Gifts to Public Charities. The new law raises the deduction limitations for cash contributions to public charities from 50% to 60% of an individual’s adjusted gross income. There is still a five-year carryover for unused cash contribution deductions that are otherwise subject to the new 60% limitation.
  • Increased Annual Exclusion. Not part of the new law, but worth noting, is that the annual exclusion from gift tax has increased to $15,000 per recipient, for 2018. Tuition and medical expenses paid directly to a provider continue to be excluded from the gift tax altogether. Lifetime gifts beyond the annual exclusion amount of $15,000 will count towards the donor’s lifetime $11.2 million combined estate/gift tax exemption.
  • Pass-Through Businesses Owned by an Estate or Trust. The new law provides that an individual taxpayer generally may deduct 20% of qualified business income from a partnership, S corporation, or sole proprietorship. The new law extends this rule to interests owned by trusts and estates.
  • The Kiddie Tax. The new law replaces the kiddie tax with a rule that taxes the net unearned income of a child at the ordinary income and capital gains rates applied generally to trusts and estates.
  • Miscellaneous Itemized Deductions. The new law eliminates the individual tax deduction for miscellaneous itemized deductions (such as legal, investment advisor and accounting fees) that would otherwise have been subject to the 2% floor under Section 67 of the Internal Revenue Code. 

Planning Opportunities. With the dramatic increase in the gift and estate tax exemption, there are expanded planning opportunities. Older estate plans may not maximize tax planning opportunities or may produce unexpected or undesired results. We strongly recommend that you review your plan to be sure that your documents produce the results you want. In particular, plans that were tied to the exemption amounts in dividing assets among beneficiaries (spouse, children, generation-skipping trusts, charity) should be reviewed.

For those with significant assets, there are opportunities to use the additional gift and estate tax exemption before the exemption reverts to 2017 amounts. The new law will allow you to immediately remove over $11.2 million ($22.4 million for married couples) from your taxable estate. While this opportunity will last until December 31, 2025, acting sooner will remove the $11.2 million (or $22.4 million) and all post-transfer growth from your estate, and will protect against future reductions in the exemption.

Note that the Oregon and Washington estate tax system is not affected by the new law. The Oregon estate tax exemption remains at $1,000,000 and the Washington estate tax exemption remains at $2,193,000 (indexed for inflation). Washington and Oregon do not have a gift tax system, so lifetime gifts should continue to be considered as a way to reduce state estate tax. Because gifted property retains the donor’s basis, careful analysis is required to determine the appropriate type and amount of property to be gifted.

This is a very high-level discussion of the changes brought about by the new law. There are many more complex changes. Individual circumstances will dictate what kind of planning, if any, may be warranted. We would be happy to discuss these and other parts of the new law that may apply to your specific situation.

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.

© Stoel Rives LLP | Attorney Advertising

Written by:

Stoel Rives LLP

Stoel Rives 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 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:

- 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.