The increased estate and gift tax exemption thresholds are set to expire in 2026. If this occurs, there is some potential for a lifetime gift “clawback” depending on how the IRS handles the situation. IRC Section 2001(g) indicates that the Secretary is responsible for issuing regulations to address the potential disparity a decedent may face between a lower estate tax exemption threshold in effect at his death and a higher lifetime gift exemption threshold, under which he gave gifts in excess of the estate tax exemption limits, in effect during his life. The IRS can handle this situation through a few different methods. How they choose to tackle the issue may create a considerable incentive for taxpayers to give gifts in excess of $5.5 million now, prior to the expiration of the current limits.
See James G. Blase, Clawback Under the New Tax Law: Part 2, Wealth Management.com, January 26, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.
