[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.amorusolaw.com\/blog\/federal-estate-tax-exemption-sunset-is-not-far-off-new-york-ny-greenwich-ct\/#BlogPosting","mainEntityOfPage":"https:\/\/www.amorusolaw.com\/blog\/federal-estate-tax-exemption-sunset-is-not-far-off-new-york-ny-greenwich-ct\/","headline":"Federal Estate Tax Exemption Sunset Is Not Far Off","name":"Federal Estate Tax Exemption Sunset Is Not Far Off","description":"\u201cMaybe not tomorrow, but the sunset of our historically high estate tax exemptions is coming\u2014and with the election on its way, it could be sooner than you think.\u201d In 2018, the Tax Cuts and Jobs Act (TCJA) doubled the lifetime gift, estate and generation-skipping tax exemption to $11.18 million from $5.6 million. With adjustments for […]","datePublished":"2020-11-09","dateModified":"2024-03-28","author":{"@type":"Person","@id":"https:\/\/www.amorusolaw.com\/blog\/author\/amorusolaw\/#Person","name":"Amoruso & Amoruso, LLP","url":"https:\/\/www.amorusolaw.com\/blog\/author\/amorusolaw\/","identifier":5,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/12de032c04195e9c39a06a6d6eea182f7b4fa655c20e245f8094a244b5cdd0cb?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/12de032c04195e9c39a06a6d6eea182f7b4fa655c20e245f8094a244b5cdd0cb?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Amoruso & Amoruso, LLP","logo":{"@type":"ImageObject","@id":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/07\/amoruso-logo.svg","url":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/07\/amoruso-logo.svg","width":0,"height":0}},"image":{"@type":"ImageObject","@id":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/04\/6a01901dd0a082970b026be42138b7.jpg","url":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/04\/6a01901dd0a082970b026be42138b7.jpg","height":600,"width":395},"url":"https:\/\/www.amorusolaw.com\/blog\/federal-estate-tax-exemption-sunset-is-not-far-off-new-york-ny-greenwich-ct\/","about":["Estate Planning","Federal Estate Tax","Generation Skipping Tax","Tax Cuts and Jobs Act \/ TCJA","Tax Planning"],"wordCount":565,"keywords":["Applicable Federal Rate","Estate Planning","Federal Estate Tax","Generation-Skipping","Tax Cuts and Jobs Act","Tax Planning","TCJA"],"articleBody":"\u201cMaybe not tomorrow, but the sunset of our historically high estate tax exemptions is coming\u2014and with the election on its way, it could be sooner than you think.\u201dIn 2018, the Tax Cuts and Jobs Act (TCJA) doubled the lifetime gift, estate and generation-skipping tax exemption to $11.18 million from $5.6 million. With adjustments for inflation, that exemption in 2020 is $11.58 million, the highest it\u2019s ever been, reports the article “Federal Estate Tax Exemption Is Set to Expire\u2014Are You Prepared?” from Kiplinger. However, this won\u2019t last forever.There\u2019s a limited time to this historically high exemption. The window for planning may be closing soon. The high amount is set to sunset at the end of 2025, but the impact of a global pandemic and the upcoming presidential election will likely accelerate the rollback.As of this writing, many states have already eliminated their state estate taxes, although 17 states and the District of Columbia still have them. The estate planning environment has changed greatly over the last decade. However, for families with large assets and for those whose assets may reach Biden\u2019s proposed and far lower estate tax exemption, the time to plan is now.Gifting Assets Now to Reduce Estate Taxes. The IRS has stated that there will be no claw back on lifetime gifts, so any gifts made under the current exemption will not be subject to estate taxes in the future, even if the exemption is reduced.Keep in mind that when gifting assets, to make a gift complete for tax purposes, you must relinquish ownership, control and use of the assets. If that is a concern, married couples can use the Spousal Lifetime Access Trust or SLAT option: an irrevocable trust created by one spouse for the benefit of the other. Just be mindful when funding irrevocable trusts of gifting any low cost-basis assets. If the trust holds assets that appreciate while in the trust for extended periods of time, beneficiaries could be hit with tax burdens.Take Advantage of Lower Valuations and Low Interest Rates. The value of many securities and businesses have been impacted by the pandemic, which could make this a good time to consider gifting or transferring assets out of your estate. Lower valuations allow a greater portion of assets to be transferred out of the estate, thereby reducing the size of the estate.With interest rates at historic lows, intra-family loans may be an effective wealth-transfer strategy, letting family members make loans to each other without triggering gift taxes. Intra-family loans use the IRS\u2019 Applicable Federal Rate\u2013now at a record low of between 0.14%-1.12%, depending upon the length of the loan. These loans work best when borrowed funds are invested and the rate of return earned on the invested loan proceeds exceeds the loan interest rate.Avoid Last-Minute Rush by Starting Now. This type of estate planning takes time. The more time you have to plan with your estate planning attorney, the less likely you are to run into challenges and hurdles that can waste valuable time. When estate tax laws change, estate planning attorneys get busy. Creating a thoughtful plan now also may help prevent costly mistakes. Planning for asset protection and distribution allows families to control how assets are distributed for many generations and can create a lasting legacy.Reference: Kiplinger (Oct. 14, 2020) “Federal Estate Tax Exemption Is Set to Expire\u2014Are You Prepared?“"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Blog","item":"https:\/\/www.amorusolaw.com\/blog\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Federal Estate Tax Exemption Sunset Is Not Far Off","item":"https:\/\/www.amorusolaw.com\/blog\/federal-estate-tax-exemption-sunset-is-not-far-off-new-york-ny-greenwich-ct\/#breadcrumbitem"}]}]