The passage of the tax reform bill in December 2017 has left some North Carolina residents confused about what it might mean for their estate plans. People may be concerned about charitable giving and the estate tax exemption increase and be unsure of what the changes might mean for them.
The Tax Cuts and Jobs Act of 2017 made several important changes. The federal estate tax exemption was roughly doubled for individuals and married couples. Since 99.8 percent of people who die do not leave estates worth more than the exemption, the change will have little impact for most people.
For those who pass away with large estates but who may not exceed the new exemption limits, there is concern that they may not make charitable contributions. People are able to leave money to a charity that is not taxable in order to reduce the sizes of their estates. However, with the new exemption, people may actually leave more to charity because their heirs may also receive more.
People who have questions about how their estate plans may be impacted by the new tax law might want to talk to their estate planning attorneys who can review their clients’ plans and make suggestions for any changes that might be needed. The attorneys may also answer any questions that their clients might have about the impact of the new law and tax planning. If the plans need to be modified to make them more advantageous under the new law, the attorneys may draft documents so that their clients, their clients’ families and their clients’ favorite charities derive the greatest benefits.