With Estate Taxes on Sale Now, You Snooze, You Lose!

With the presidential election coming up next month, the estate planning conversation is focused on the gift tax exemption amount, which is $11.58M. The exemption is amount is expected to roll back to $5M (adjusted for inflation) after December 31, 2025. However, this exemption amount could possibly be reduced earlier if President Elect Joe Biden wins the election. 

Therefore, if you do not take advantage of this exemption as soon as possible, you could lose it. This exemption is a once-in-a-lifetime opportunity. Therefore, it is crucial to consider this exemption in your estate planning strategy. 

Some people have decided to put of gifting their assets because these “gifts” typically come in the form of assets out of a person’s taxable estate. The concern lies with not having enough income to live off of following such a transfer. 

However, it may be possible for you to gift interests in non-income-producing real property. This type of gifts are not as big of a threat to financial security and are therefore more appealing. 

If you do take advantage of this type of transfer, you may be able to receive valuation discounts “with respect to the gifted interest to reduce its value for estate and gift tax purposes.

You could also consider irrevocable trusts. 

Now is a better time than ever to consider taking advantage of the gift tax exemption.

See Jeffrey M. Verdon, With Estate Taxes on Sale Now, You Snooze, You Lose!, Kiplinger, September 25, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.