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How will the Tax Cuts and Jobs Act affect your estate plans?

The Trump Administration has made many changes since taking over the Oval Office. One of those major changes has been the introduction of the Tax Cuts and Jobs Act. According to CNBC, this tax reform may affect your estate plans and you should adjust them accordingly to avoid any issues. 

This Act made some fairly large changes to the tax code. The last major tax code changes happened in 1986, so it has been a while. With this change comes concerns about how your estate plans should be adjusted because of changes to tax brackets, exemptions, deductible expenses and credits.

Traditional IRAs have commonly been popular because you can deduct your contributions each year when you file taxes. However, with the tax changes, it is likely to be a better option to go with a non-deductible Roth IRA because it is tax-free income. The best part is that the Act reduces the taxes on converting your IRAs to Roth IRAs.

The estate tax exemption was doubled in the Act. This will not have much effect on you if you are a typical retiree, but if you are a high earner or a business owner, then you need to pay attention. Your heirs could end up paying a gigantic amount in taxes if you are not careful. You may be better off if you gift large assets now instead of leaving them as part of your estate. 

Making some minor changes to your estate can help you and your heirs in the long run to avoid paying more taxes under the new tax bill. This information is for education and is not legal advice. 

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