The Future of Estate Taxes and Trust Planning for 2017 and Beyond

The Future of Estate Taxes and Trust Planning for 2017 and Beyond

by Harley K. Look, Jr.

After a tumultuous fifteen years of constantly changing estate tax laws, with no estate taxes whatsoever in 2010, and going from an estate tax exemption of $1.0 million up to $5.25 million in 2013, we are now in what appears to be a period of calm and stability with some sensible tax laws that are very generous and for now, permanent. How long this will last, no one knows, but the longer it lasts, the more we are encouraged.

With the presidential election over, we now have a better sense as to the estate tax laws for the next four years. Ms. Clinton would have tried to lower the exemption to $3.5 million, and raise the tax rates, but Mr. Trump said he is in favor of eliminating the estate tax. We don’t know that he will be successful, but even if he isn’t, then the exemption will continue to increase with inflation, but not decrease, so for 2017, the estate tax exemption will be $5.49 million, and with portability1 by filing a timely estate tax return, married couples may be able to shelter a combined $10.98 million, without a trust.

Consequently, it’s critical that you review your estate plan to take into consideration the current tax laws and other changes in the law. There have also been a lot of state law changes impacting your financial powers of attorney, medical powers of attorney and living wills.

Under the current tax laws, there is an opportunity to amend your trust to provide the best income tax benefits to your beneficiaries. Most trusts sacrificed income tax benefits in order to achieve estate tax benefits, but everyone prefers to have their beneficiaries pay lower long term capital gains taxes somewhere down the road after they’re gone instead of estate taxes at their deaths.2

Now, under today’s tax laws, most clients are electing to change their trusts and their beneficiaries are getting better income tax benefits without any estate taxes, but each case depends on the facts, so it’s important for you to review the impact of the laws on your personal estate plan to see what changes, if any, you may want or need.


For a discussion on portability and the nontax benefits of trusts, please refer to the following article in this website’s News Section:

For a discussion as to trusts eliminating estate taxes, but losing capital gains tax benefits, please see the following article in this website’s News Section:


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