Farewell to the current tax exemption for gifts and estate taxes?
March 30, 2021
Ward and Smith, PA
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We recently wrote about a time slot Take advantage of increasing inheritance and gift tax exemptions before they are set.
It becomes clearer that the window may close quickly. The option to avail of the current gift exemption may now exist as it looks like we will soon be saying goodbye to it.
With the passage of the American Rescue Plan Act to tackle the ongoing COVID-19 pandemic, it appears that Congress has turned its attention to sweeping changes to applicable tax law. For example, Senator Bernie Sanders proposed legislation on March 25, 2021 that would provide for this, among other things
- Reduce the tax exempt amount a person can give during their lifetime or leave to their children after death from $ 11.7 million to $ 3.5 million
- Increase estate tax rates, which range from 45% to 65% depending on the total value of the estate.
The proposed effective date is January 1, 2022. While it remains to be seen whether Senator Sanders’ proposed bill will become law, the significant risk of a negative change to the Inheritance Tax Act seems even greater. The time window for taking advantage of the current exemption could be as narrow as before until December 31, 2021.
There are a number of ways you can use all or part of the current exemption amount through careful gift planning. Given strong pressure from some Congressmen to drastically reduce the current amount of exemption, now is the time to contact an estate planning attorney to see if the use will be helpful to your family and you while it is available. Otherwise, you might be saying goodbye to a great opportunity to save estate tax.
Originally published by Ward and Smith, March 2021
The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.
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