Keep Calm and Plan On: Estate & Gift Changes Ahead
Wednesday, January 20, 2021

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. 

 

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