Ethan R. Okura
Hawai‘i Herald Columnist
Happy New Year! The following is the 2018 update of important numbers used in estate planning and Medicaid planning in Hawai‘i.
How much money and property can a person have at the time of death without paying estate taxes?
At the end of 2017, Congress passed a new tax bill, which the president signed into law. We will discuss some of the income tax changes in detail in next month’s column. One of the main impacts of this new law, however, is that it doubles the previous estate and gift tax exemption from $5 million to $10 million (adjusted for inflation). Taking into account inflation, the actual amount exempt from estate tax for 2018 will be $11,200,000 per person (or perhaps slightly less, as the new law also changes the method used to calculate inflation). The Hawai‘i estate tax law was previously amended to follow the federal estate tax law, so there is also an exemption of $11,200,000 from Hawai‘i estate tax. (In other words, if you pass away in 2018 with less than $11,200,000, and you didn’t already use up any of your exemption by making gifts during your lifetime, you will not owe any federal or Hawai‘i state estate tax.) A married couple each has $11,200,000, so the two of you together can leave up to $22,400,000 tax-free to your children or other loved ones. This “doubling” of the estate tax exemption will expire at the end of 2025. Unless Congress acts to make it permanent, the estate tax exemption will go back to the $5 million per person exemption (adjusted for inflation) in 2026.
© OKURA & ASSOCIATES, 2018
Honolulu Office (808) 593-8885
Hilo Office (808) 935-3344
Ethan R. Okura received his doctor of jurisprudence degree from Columbia University.
This written advice was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury regulations governing tax practice.)
This column is for general information only. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate planning specialist.