Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, June 5, 2020

Is it Time to "Use it or Lose it?"

Tax-exemption-image-e1516143026899Due to COVID-19, we will likely see significant statutory changes to the federal estate, gift, and generation-skipping transfer tax exemptions. 

"The United States Congress and the Federal Reserve have been taking unprecedented steps to shore up our economy – massive stimulus packages have already made their way into law, and more appear to be coming down the pike."

Market observes are backing these strategies as a way to help businesses and families make it through the coronavirus pandemic. However, as the continued pandemic affects the market-volatility, legal and tax observers have a recurring thing: "At some point, taxpayers will have to replenish the government's piggy bank."

The Tax Cuts and Jobs Act of 2017 (the "TCJA") increased the unified federal estate, gift, and generation-skipping transfer tax exemption to $10 million per person with an annual inflationary adjustment. In 2020, an individual can transfer – by lifetime gift, transfer at death, or a combination of the two – a total of $11.58 million to non-spouses without incurring these transfer taxes. However, the heightened exemption amounts are set to "sunset" on January 1, 2026, in which the $5 million baseline exemption will be back in effect. 

Given the stimulus spending and the current political climate, many are wondering how long the exemption high-water-mark can last. Thus, it may be more imperative now than ever before for individuals facing potential estate tax liabilities to find a way to use this massive exemption amount while it is still available.

See Jennifer Boyer, Is it Time to "Use it or Lose it?", Ward and Smith, P.A., June 3, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


Current Events, Estate Planning - Generally, Estate Tax, Generation-Skipping Transfer Tax, Gift Tax | Permalink


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