When the government first announced the tax reform for 2018 onward, many people in Ohio wondered how it would affect their finances. After all, what they make is only one aspect of income. What Uncle Sam took for itself affected the actual take-home pay. One surprising change many people soon noticed was an increase in how much of an inherited estate passed below Uncle Sam’s radar for tax purposes.
According to Forbes, the estate and gift tax exemption climbed from $5.49 million in 2017 to $5.6 million per person. A married couple together could receive an $11.2 million exemption. The annual gift tax exemption also increased from $14,000 to $15,000. However, many people point out that most Americans are not leaving behind multimillion-dollar estates when they die or handing out thousands of dollars as gifts, making this a benefit aimed at the wealthy and their heirs.
CNBC notes that even so, wealthy people may find their spouses disinherited as a result of the reform. This depends on how they worded the current will or whether or not they have one. If they established trusts for their spouse and children, the state may use the tax-free allowance limit to decide what children may receive before passing the excess to the spouse.
Perhaps because of this, people rich and poor all across the United States are now rewriting their wills to ensure the new reform does not affect the plans they made. Some are making plans for the first time. Note that regardless of what is in a will, it must comply with state and federal laws to remain legitimate.