Keep Calm and Plan On: Estate & Gift Changes Ahead

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The current federal unified estate and gift tax exemption of $11.7 million per person is set to automatically revert to approximately $6 million on January 1, 2026.  However, with a new president and rebalancing in the House and Senate, tax reform measures may lower the exemption before 2026. 

Policy commentators speculate on possible exemption amounts as high as $6 million and as low as $3 million, and even surmise that there could be an end to the unified credit, resulting in a $3.5 million exemption from estate tax and a $1 million exemption from gift tax, for example.  Another possibility includes elimination of the basis “step up” at death, which for many taxpayers could be a more costly change than reducing tax exemptions.  Further speculation surrounds whether such tax changes could be made retroactive to the beginning of the year enacted.

While any projections are conjecture at present, it makes good sense to consider the potential effect of such changes on current estate plans. As Trusts and Estates attorneys, we guide and advise our clients on minimizing (and often eliminating) federal and state taxation through use of trusts, structured gifts, and many other estate planning strategies.  Please be assured that we are closely tracking the developments in Washington in order to best serve our clients.   

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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