How does the New Tax Law Impact Singles?

Being single does not exempt you from estate planning.

Are you single?

If yes, your life looks different than those who are married.

You plan differently than your married counterparts.

According to a recent MarketWatch article titled “How single folks should handle estate-tax planning under the new tax law,” your estate planning and tax planning will look different as well.

How so?

Your tax exemptions will be different.

Married couples who file jointly will have an estate tax exemption twice your amount.

If you die in 2019, $11.4 million will be exempt from federal estate taxes.

If your assets do not exceed this value, then you will not owe federal estate taxes.

What if your assets are greater than this?

You will be taxed at a 40 percent on any excess.

Are there ways to decrease your taxable estate if you have exceeded this federal estate tax limit?

Yes.

How?

You can give to IRS approved charities.

You can give a gift of up to $15,000 per year to as many of your friends or family as you wish.

You can pay for medical bills or college tuition for another person as long as it is paid directly to the institution.

You can gift stocks or bonds while you are alive up to $11.4 million without incurring federal gift tax liability.

If you give more than the annual exclusion, you will be reducing your eventual estate tax exclusion.

There are numerous nuances when it comes to estate planning.

To keep yourself out of tax trouble and ensure your efforts do not backfire.

How?

Work with an experienced estate planning attorney.

He or she will also be able to help you plan for state estate taxes, if applicable in your state of residence.

Although not all states have an estate tax (e.g., neither Kansas nor Missouri has a state estate tax), some have an exemption threshold that is lower than the $11.4 million federal estate tax threshold.

Even if your estate is less than any federal or applicable state exemption amount, estate planning is still important.

Do not delay and cross that 2019 resolution off of your list.

Reference: MarketWatch (December 10, 2018) “How single folks should handle estate-tax planning under the new tax law”