IDEAS FOR THESE TRANSITIONAL TIMES

As tax lawyers and estate planners, we see that there is a lot of uncertainty and speculation in the marketplace about what the estate and gift tax system will look like if Joe Biden should defeat Donald Trump in the November 2020 election.  We all know that under current law, the estate and gift tax exemption is at an all time high of $11.58 million per person or over $23 million per couple.  Under current law, the exemption amount is designed to revert back to $5 million per person and $10 million per couple (adjusted for inflation) at the end of 2025.

Many commentators have speculated that if Joe Biden wins the presidency, the estate tax exemption will be scaled back to $5 million per person (adjusted for inflation) or even lower to the 2009 level of $3.5 million per person; however, as of October 1, 2020, a review of Mr. Biden’s tax plan does not contain a definite proposed reduction.  Moreover, his proposed tax plan does not specifically contain an increase in estate tax rate of the current 40% tax.  The one thing Biden’s platform does contain is a statement that the step up in basis at death should be repealed.  Even in the absence of proposed guideposts, nearly everyone predicts that if there is a Biden victory, the estate tax exemption will be scaled back, and the estate tax rate will increase.  Thus, for families with gross estates in the $10-$20 million range, or above, now is the time to consider implementing tax and estate plan strategies to take advantage of lifetime gift opportunities that will likely disappear effective January 1, 2021 if Biden is elected.

Even if your net worth is not over $10 Million we have plenty of sophisticated strategies and techniques which could be implemented depending on your asset mix, goals, and objectives.  The tools in our toolbox include sales to intentionally defective grantor trusts (IDGTs) in exchange for promissory notes to fix growth, the creation of spousal limited access trusts (SLATs), creations of charitable trusts and foundations, and other sophisticated techniques which are both time tested and flexible.

If you are a current client, prospective client, financial advisor, or other interested party, please contact Jeffrey D. Moss or your Dawda Mann attorney for more information.