Estate Tax

January 20, 2022

Estate Planning in 2022

After a year of speculation, 2022 begins with no new federal estate and gift tax legislation. The significant changes to federal estate and gift tax laws were not implemented by new legislation. Those changes included a substantial reduction in the estate and gift tax exemption among altered tax treatment for grantor trusts and even a proposal to eliminate the different tax treatment of grantor trusts and elimination of step-up in basis for assets at death.

Keep in mind that the current estate tax exemption levels will expire after 2025, even without legislation. After 2025, the federal estate and gift tax exemption will be cut from more than $12,000,000 to $5,000,000 per individual (plus an inflation adjustment between 2018 and 2025).

Despite all of the lurking uncertainty, some positive developments for taxpayers beginning in 2022. They include:

December 16, 2021

Thought about gifting in 2021 and 2022

by David M. Goldman

There are many reasons you might consider giving your adult children a portion of their inheritance now while you’re alive and well. Maybe you’ve seen your nest egg grow thanks to a robust stock market, and you have more in savings than you thought you would at this stage of your life. Perhaps you and your spouse enjoy excellent health and have received nothing but good checkups for years, so you’re not overly concerned about medical expenses. Or maybe you just want to be there to experience how your financial assistance helps your children pursue their dreams and achieve their goals. Do you really want to set the stage for the family drama that could unfold by violating the “fairness principle?”

Of course, you could tell the recipient of your gift, along with your other adult children, that the gift will be deducted from the recipient’s inheritance when you pass away. This might solve the problem, but then again, it might not. As you’ve no doubt learned by now, your “kids” may be grown up, but that doesn’t mean sibling rivalries and other powerful emotions from childhood simply disappear.

While many parents would like to help their adult children financially as much as possible, before acting on your generous inclinations, you should consider a number of potential problems.

April 20, 2021

The 99.5% Act – Time to Rethink Your Estate Plan?

by David M. Goldman

While many do not think all of the “For the 99.5% Act introduced by Bernie Sanders plan on March 25, 2021 will become law, there is certainly concern over the gifting and estate tax portions which would seem to affect more than just the upper 1/2 percent of the US population. This is the first attempt at legislation following Joe Biden’s election that could lower the federal estate tax exemption. There are many changes and various dates when the changes would take place:

For those who die or make gifts after December 31, 2021.

Reduce the U.S. federal estate tax exemption from over $23 Million to $3.5 million for U.S. citizens and U.S. domiciliaries;