News from Moss & Barnett 
Estate Tax Alert
United States Capitol Building
On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act into law, which makes a number of changes to the federal tax laws.
Notably, the Tax Cuts and Jobs Act increases the federal estate and gift tax exemption to $11.2 million per person (or $22.4 million for married couples). The increased federal estate tax and gift tax exemption generally means that an individual may, during life or at death, transfer assets with value up to $11.2 million free of gift or estate taxes. The new estate and gift tax exemption applies to individuals dying or gifts made after December 31, 2017. The new law does not affect the gift and estate tax rates. All transfers subject to gift or estate taxes will be taxed at a flat rate of 40%.
The generation-skipping transfer tax ("GST") exemption that applies to transfers made to persons a generation or more below the donor ( e.g., gifts from grandparents to grandchildren) is also increased by the Tax Cuts and Jobs Act.
Despite the changes, Minnesota residents remain subject to Minnesota estate tax laws upon their deaths. As of January 1, 2018, the Minnesota estate tax exemption is $2.4 million, meaning that assets transferred after a person passes away having a value in excess of $2.4 million may be subject to Minnesota estate taxes and taxed at a maximum rate of 16%. Gifts with a value greater than the annual exclusion that are made three years prior to the death of the donor will not be subject to Minnesota estate tax upon the donor's death.
Although not directly affected by the Tax Cuts and Jobs Act, for gifts made after December 31, 2017, the annual gift tax exclusion will increase to $15,000 per person.
  2017 2018
Federal gift/estate tax exemption $5,490,000 $11,200,000
Federal gift/estate tax rate 40% 40%
Federal annual gift tax exclusion $14,000 per recipient $15,000 per recipient
Federal GST exemption $5,490,000 $11,200,000
Federal GST tax rate 40% 40%
Minnesota estate tax exemption $2,100,000 $2,400,000
Maximum Minnesota estate tax rate 16% 16%
Basis on death Step up to fair market value on date of death Step up to fair market value on date of death
In light of the changes to the estate tax laws, this is a good time to review your estate plan to determine whether changes are needed.
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