Saving Estate Generation Tax Skipping With Upstream Gifts To The Older Generation

Complex times are times to seek advice and consult your Estate Planner. Federal estate tax laws in place during the 1970s, 1980s and 1990s were very oppressive. These laws were modified to a great extent and now benefit wealthier members of society. Currently, an unmarried US citizen with an estate worth less than $11,580,000 will not have to pay a federal estate tax. By law, this $11,580,000 threshold amount (also known as the exemption amount) is set to decrease to $5,000,000 at the end of calendar year 2025 (subject to adjustment for inflation). For a married couple, the exemption amount is $23,160,000.

In addition to this statutorily mandated reduction in the exemption amount, the current pandemic is likely to cause the federal government to lower the estate tax exemption (even below the $5,000,000 planned threshold). The theory is that by reducing the exemption amount, additional taxpayers will be required to file estate tax returns and pay an estate tax. The additional revenue would help reduce the federal deficit caused by the enormous Covid-19 related spending.

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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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