Q: How does the Democrat’s newly proposed tax bill affect the federal estate and gift tax exclusion?
The new bill would reduce the federal estate and gift tax exclusion from its current level of $11.7 million for individuals and $23.4 million for married couples to its 2010 level of $5 million per individual, adjusted for inflation, which would bring the estate and gift tax exclusion to roughly $6 million.
The proposed reduction would apply to estates of descendants who die or make gifts after December 31, 2021. This reduction would expose estates and gifts above the exclusion amount to a 40% federal estate tax.
If you have assets in excess of $6 million, you should make any gifts before the end of the year to qualify for the higher exclusion rate. Some families may even want to consider making gifts before the legislation is passed due to the bill’s proposed changes to certain types of trusts.
With this in mind, if your estate is over the $6 million exemption, contact your local Personal Family Lawyer® right away.