“If you have not already been inundated with invitations to webinars, articles and newsletters regarding estate planning, you should consider doing so before the end of the year, since you undoubtedly will receive these over the next few months.”
When it comes to estate planning, there’s no such thing as a “one-size-fits-all” solution. That is especially as we come to the year end with predictions of tax changes in the coming years. However, there are several factors that should be considered and discussed with your estate planning attorney, as recommended in this recent article from The National Law Review “Top Ten Estate Planning Recommendations before the End of 2020.”
The estate, gift and generational-skipping transfer tax exemption is now $11.58 million per person. It’s scheduled to increase every year by an inflationary indexed amount through 2025 and in 2026 will revert to $5 million if there are no further legislature tax actions. The IRS has already said that if the exemption is used this year, there will be no claw back even if new tax laws come into effect before 2025. This is a “use it or lose it” scenario. If you are planning on using it, now is the time to do so.
It is possible that Discounts, GRATS, Grantor Trusts and other estate planning techniques may go away, as a result of new laws. Consider taking advantage of commonly used estate planning tools before it is too late.
Married couples who are not ready to gift significant amounts to their children or to put assets into trusts for their children should consider the SLAT–Spousal Lifetime Access Trust. They can create and gift the federal estate tax exemption amount to a SLAT for each other and still maintain access to the assets during their life.
Interest rates are at an all-time low, and that is when tools like intra family loans, GRATs and GLATs are at their best.
Although it may seem tempting to move to Florida, Nevada, Texas and other low- or no-income tax states think about all aspects of such a move. Be aware that high tax states like New York and California are not going to let your tax revenue leave easily. Check with our firm before you make the move to be sure you follow the rules in changing your domicile from a high-income tax state.
Reference: The National Law Review (Oct. 6, 2020) “Top Ten Estate Planning Recommendations before the End of 2020”