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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

With all the media coverage in the last couple of months, you have certainly heard at least tidbits about the new&nbsp;Tax Cuts and Jobs Act&nbsp;(Act), signed by the president in December. One of the most important provisions of the Act for high net worth (HNW) families is the increased exemption amounts for estate, gift and generation-skipping transfer (GST) taxes.

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HNW Families Should Take Advantage of the Increased Tax Exemptions for Gifts

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Wealthy families should look at ways to take advantage of the significantly higher estate, gift and GST tax exemptions contained in the Act. In fact, if you have not made prior taxable gifts, you can gift up to:

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This also means that&nbsp;if you have already used your full gift tax exemption in previous years, you are&nbsp;still eligible to transfer an additional:

Keeping in mind that the Act sets an expiration date of December 31, 2025, for the increased exemptions (and noting that any upcoming change in political power could hasten a decrease in exemption), your ability to benefit from these changes is quite possibly a limited-time offer. In 2026, the lower $5,000,000 exemption (adjusted for inflation) is scheduled to return.

HNW Families Should Utilize Annual Exclusion Gift Strategies

Another opportunity for giving (which doesn’t require incurring a gift tax or using any of your gift tax exemption amount) is through Annual Exclusion Gifts. The amount that a person can give annually to another person (or to as many people as desired) has increased under the Act to $15,000 per donee. In other words, a donor can give as many gifts valued at $15,000 to as many donees as he or she wishes, and a married couple could double their gifts to give $30,000 per donee. While it is easiest to give gifts of cash directly to adult donees, it is also possible, under certain circumstances, to make such gifts using non-cash amounts, in trust or to minors. &nbsp; If you are making annual exclusion gifts to minors, you have several options, including:

“Crummey” Trusts (whereby each beneficiary has a limited withdrawal right upon contribution to the trust)

Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts

529 Plans and other college savings accounts (under the Act you can also now fund up to $10,000 per year per student for tuition, fees, books and related expenses for elementary and secondary students)

HNW Families Gain Tax and Other Benefits from Giving Now Rather Than Later

Some of the planning strategies work better when interest rates are low, as they are now. With rates currently on the rise, this is a reason to act sooner rather than later.

Transferring an asset earlier means that subsequent appreciation will occur outside of your estate.

There could beother tax benefits to assets given during your lifetime.

Quite importantly,gifting assets earlier helps prepare the next generation.

Finally, making&nbsp;lifetime gifts to children and grandchildren now may help them when they need it most. Plus, you can participate in the enjoyment of the gift while you are alive!

Wondering about Other Benefits of Tax Reform for HNW Families?

This Act contains a variety of changes that can affect your wealth and business decisions this year. Don’t hesitate to contact your Warner attorney, or an attorney in our Private Client and Family Office practice, including this blog post’s author, Laura Jeltema, or our practice chair, Mark Harder, for assistance.&nbsp;

Legacy Matters

Private Client and Family Office

Partner

Laura A. Jeltema

Trusts and Estates

Gift Strategies to Help High Net Worth Families Benefit from Tax Reform

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Gift Strategies to Help High Net Worth Families Benefit from Tax Reform

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