Wills, Trusts & Estates: Plain and Simple – Estate Planning: Is Now the Time to Use It or Lose It?
October 16, 2020
The November election is right around the corner, and we could be looking at lower gift and estate tax exemptions and higher gift and estate tax rates. In addition, various estate planning techniques currently in use (for example, Grantor Retained Annuity Trusts (“GRATs”), discounts applied to fractional interests in property transferred to beneficiaries) may be limited, or entirely prohibited under future legislation. Now could very well be the time to use it or lose it.
The current federal gift and estate tax exemption of over $11.5 million per person (over $23 million per married couple) is set to revert back to $5 million (almost $5.5 million, as adjusted for inflation) beginning in 2026. The November election may accelerate that decline in exemption amount, or even reduce it further. The current gift and estate tax rate is 40%, and it would be surprising if a Democratic Congress does not seek to increase the tax rate and further reduce the exemption, which is why it is important to think about your estate plan sooner, rather than later.
Reprinted with permission from Lloyd Harbor Life, October 2020.
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