New Tax Law Doubles Estate and Gift Tax Exemption



New Tax Law Doubles Estate and Gift Tax Exemption 

Kurt Rifbjerg, Esq. 

January, 2018

Among the many changes brought about by the recently passed Tax Cuts and Jobs Act is the doubling of the estate and gift tax exemption currently in effect.  This increase significantly impacts and simplifies estate planning considerations for the vast majority of individuals and families in California.  This alert will highlight how the new law affects the exemption, what estate planning documents remain necessary under the new law, and how this law will affect your current estate plan.

The exemption for individuals in 2017 was $5.49M (which results from the 2011 base exemption of $5M indexed for inflation).  The new law increases the 2011 base exemption amount to $10M and after accounting for inflation, the exemption for individuals in 2018 will be $11.2M.   Married persons are allowed to use the exemption of their deceased spouse, if a portability election is made on the decedent’s estate tax return, which effectively doubles the exemption for married couples.  The new law allows for married couples, if they both die in 2018, and assuming that they have not made significant lifetime gifts, to pass $22.4M to whomever they want tax free.

The new exemption applies to estates of people who die in 2018 through 2025.  Crucially, the exemption reverts back to the $5M 2011 base after 2025.  It is uncertain whether the exemption will be subsequently extended or otherwise modified.  People with estates in the $10M-$20M range should take note of this change in the future.  While the current exemption will sunset in nearly eight years, significant planning can be done in the interim to take advantage of the exemption and reduce unnecessary expenses. 

Your Current Estate Plan May Be Out of Date

Many recent estate plans and revocable trusts were designed with a $5M individual exemption as a premise, and some were based on an even lower exemption amount if your plan was created in the 1990s or 2000s.  Those plans relied on mechanisms, such as an A/B or QTIP trust, to maximize both spouses’ estate tax exemptions, in an era when portability was less certain, or the marital deduction at the death of the first spouse.  While these arrangements may still be appropriate for some, they probably do not make sense for most under the current exemption scheme.

Modification and amendment of your old estate plan may be very simple, while both spouses are living, at least, and will have the effect of reducing significant trust administration expenses after your death.  A trust must be administered by its terms; those trusts which provide for a mandatory A/B trust split must do the split even if the estate tax avoidance reasons it was designed for are no longer present.  It is not always certain that a court will grant leave to avoid funding the B trust or splitting the trust by its terms.  That, in and of itself, is an avoidable legal expense if an estate plan is properly updated. 

A knowledgeable estate planning and probate attorney can help people decide how to structure their estate plan to prevent unnecessary taxes and expenses which result after a person’s death. Kimball, Tirey & St. John LLP’s estate planning and probate attorneys routinely represent individuals, married couples, and small business owners in the creation of comprehensive estate plans, and can provide excellent representation at an affordable price.


Kimball, Tirey & St. John LLP’s estate planning attorneys can help you identify and implement the best estate planning options.  Feel free to contact us with any questions at (800) 574-5587.

IREMĀ® Named 2017 ENERGY STARĀ® Partner of the Year

IREM® Named 2017 ENERGY STAR® Partner of the Year

CHICAGO – (April 6, 2017) – The Institute of Real Estate Management (IREM®) has been recognized by the U.S. Environmental Protection Agency (EPA) as a 2017 ENERGY STAR Partner of the Year Award winner. Each year, the EPA honors organizations that have made outstanding contributions to protecting the environment through energy efficiency.

IREM®, an ENERGY STAR partner since 2009, earned the award in the Energy Efficiency Program Delivery – Commercial & Industrial category because of their commitment to saving energy, dedication to measuring and tracking progress, and efforts to communicate the importance of energy efficiency to a wide audience.

IREM’s accomplishments include the IREM® Certified Sustainable Property certification, which provides an accessible framework for property managers to reduce energy, water, and waste at the office properties, multifamily communities, and shopping centers in their portfolios and incorporates ENERGY STAR tools and resources, as well as live workshop and online courses on energy management that teach students how to use ENERGY STAR tools and resources, including the EPA’s ENERGY STAR Portfolio Manager® benchmarking tool. IREM® will be recognized by the U.S. Environmental Protection Agency and the U.S. Department of Energy in Washington, D.C. on April 26, 2017.

“IREM® is a strong and active supporter of ENERGY STAR and proud to be a 2017 ENERGY STAR Partner of the Year. As real estate managers dedicated to exceptional operations, IREM® Members know firsthand the benefits of ENERGY STAR tools and resources in making their properties more environmentally and financially sustainable,”states Mike Lanning, CPM®, 2017 IREM® President, and Senior Vice President, Cushman & Wakefield, AMO®, Kansas City, MO., “We look forward to continuing our partnership with ENERGY STAR to educate our members and the industry on those tools and resources and the broader benefits of energy efficiency.”

In 2015 alone, ENERGY STAR and its partners saved American businesses and consumers 503 billion kilowatt hours and $34 billion dollars on their energy bills, while achieving broad emission reductions.

For a complete list of 2017 winners and more information about ENERGY STAR’s awards program, visit