After an election process that has been unprecedented, Joseph Biden is the next president of the United States, and the Democratic Party will have control of both the U.S. Senate and the House of Representatives. Although specifics are not yet known with any level of certainty, during the presidential campaign the Democratic Party endorsed the possibility of a reduction of the current estate tax exemption and elimination of the step-up in basis at death. Changes to the estate tax are not typically retroactive, but those looking for certainty and hoping to take full advantage of the estate tax exemption now can take certain steps and implement gifting strategies to lock in the current estate tax exemption. There may be a small window of opportunity to make these changes once any new tax laws are adopted.
The Federal estate tax (commonly known as the “death tax”) includes an exemption or credit of $11,700,000 for an individual dying in 2021; this is the highest threshold the estate tax exemption has ever been. This means an individual’s estate will not be subject to the Federal estate tax (a tax rate of 40%) unless the assets of an individual’s estate exceed the estate tax exemption threshold. However, the estate tax exemption amount is subject to change and may be one of the items on Congress’s agenda. There have been predictions that the estate tax exemption may be decreased to as low as $3,500,000.
If you have been considering making gifts of a business interest, real estate, or other assets but have not decided when to make such gifts, now may be the time. For an individual or couple with a higher net worth who are concerned about the possibility of a decreasing estate tax exemption, consider the gifting strategies outlined below before the opportunity is lost.
If you are considering a proactive approach to your planning, consider the following to take advantage of your available estate tax exemption:
If you haven’t had a chance to incorporate the above strategies in your personal planning, contact any member of our GSRNH estate planning team as soon as possible so we can discuss the best estate planning and gifting strategies for you. Please call us at 630-655-6000 or email us at INFO@GSRNH.COM.