With the election nearing, many are thinking about changes that may be on the horizon. We are always monitoring changes in the law that impact estate planning and, now especially, potential changes in the federal estate and gift tax exemption.
The current exclusion amount from federal estate and gift taxes is $11,580,000. Married couples are able to double that to $23,160,000.
If the Democrats do well in the 2020 elections, the expectation is that the exemption will substantially decrease in 2021. No one can say for sure what the new exemption would be, but most tax experts are predicting a $5,000,000 per person exemption.
For individuals with estates over $5,000,000, and married couples with estates over $10,000,000, this means a potential “use it or lose it” opportunity.
The IRS has said there will not be a clawback. That means if the full $11,580,000 is used in 2020, and the exemption down to $5,000,000 in the year of death, the estate will keep the higher exemption amount. It will work like the FIFO rule in accounting – the oldest exemption amount will be applied first.
There isn’t much time to implement a gifting plan that utilizes the full exemption amount before the end of the year. If your estate could be impacted by this potential change in exclusion amount, you should consider taking action now.
Are you still wondering what is exactly right for you and your needs? Call the Estate Planning Law Group of Georgia at 770-822-2723 or contact us through our website.
Contact the Estate Planning Law Group of Georgia
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