Q: If Democrats sweep the election, what’s likely to happen to the increased gift and estate tax exemption passed under Trump’s tax cuts?
A: Dear Anxious:
The Tax Cuts & Jobs Act increased the exemption to $11.58 million for single taxpayers and $23.16 million for couples. This generous exemption will sunset at the end of 2025, but should a “blue wave” occur, the enhanced exemption could be repealed much sooner.
In fact, Joe Biden proposes to reduce the exemption back to at least $5.45 million for individuals and $11.58 million for couples—and possibly even lower. Moreover, since lawmakers have previously made tax rates retroactive, it’s possible these changes could go into effect as early as Jan. 1, 2021.
In light of this, if you have assets valued between $3.5 and $11 million, you need to seriously consider taking steps now to lock in estate-tax exemption rates that may never come again. To do so, consider transferring assets out of your estate now, as such transactions can take weeks to complete.
Immediately meet with a Personal Family Lawyer® to discuss your options and get things started. That way, you’ll have your strategies in place and ready to go, so you can pull the trigger (if needed) once election results are final.