What the changes mean

Individuals who own assets worth more than $5.49 million at their death could have to pay a 40 percent federal estate tax on the amount in excess of the exemption. The exemption increased by $40,000 from the 2016 amount.

However, even bigger changes to the estate tax could be in the works. According to Forbes contributor Ashlea Ebeling, President-elect Donald Trump wants to eliminate the estate tax and replace it with a carryover basis regime for estates valued at $10 million or more. The latter provision would act as a sort of capital gains tax.

Ebeling quoted Trump's campaign website, which said that the new capital gains tax, if implemented, would be designed to exempt small businesses and family farms. More than a few institutions have speculated as to what this capital gains after death tax would look like.

But will Trump's plan go through? Charles Fox, an estate lawyer from Charlottesville, Virginia, told Ebeling that Trump's plan could face resistance from Republicans.

"My guess is that any proposal that Mr. Trump offers with the support of the House would face lukewarm reception in the Senate," said Fox. "Anything on estate tax would have to be part of an overall tax reform effort, a compromise on both sides."

Preparing your estate taxes

Regardless of next year's outcome, you should speak with a tax attorney about estate planning so that transfer taxes can be minimized.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Jeffrey Pittard, at 201-806-3364.