News and Commentary

Tax Reform Brings Estate Tax Relief to Ultra-High-Net-Worth Families by Lee F. Hediger

Ultra-high-net-worth families received very generous relief from federal estate taxes in 2018 under the Tax Cuts and Jobs Act. For 2019, the exemption from federal estate taxes increases even further to $11.4 million for individuals or $22.8 million for married couples filing tax joint tax returns.

As a result, individual taxpayers can transfer up to $11.4 million in assets to their heirs in 2019 (or up to $22.8 million for married couples filing jointly), either during life or at death, without incurring federal gift and estate taxes. Anything above the excluded amounts are subject to a 40 percent gift or estate tax rate. However, as a word of caution, families must recognize that the higher exemption amount is set to expire on Dec. 31, 2025, when it will revert back to it 2017 limit of $5.6 million.

Without the ability to know what Congress and shifting political priorities will occur over the next eight years, high-net-worth families would be wise to plan appropriately under the guidance of experienced financial advisors and tax consultants to maximize the effective use of the increased exemptions during the interval of time it is available. This would also include maximizing annual gifts to trusts or taking advantage of an inflation-adjusted increase in the annual gift tax exclusion that allows individuals to transfer of up to $15,000 per year to as many people as they choose free of gift taxes. For married couples filing joint returns, the transfer tax exclusion is $30,000 per beneficiary.  These gifts effectively transfer assets out of an individual’s taxable estate to family members or other named beneficiaries and allow grantors to use trust assets to fund life insurance policies or, in some instances, pay income tax liabilities while they are alive.

About the Author: Lee F. Hediger is a co-founding director and chief compliance officer with Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email info@provwealth.com.

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Lee F. Hediger is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

 


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