The 2020 Election and the Effect on Current Gift, Estate and Generation-Skipping Transfer Taxes – Due to the election results and President Joe Biden taking Trump’s position in the Oval Office, conversation continues to grow surrounding the area of taxes and estate planning.
As many are aware of by now, Biden has brought forth a few proposals that will greatly impact estate planning for Americans.
Gift tax, estate tax and generation-skipping transfer are among federal taxes that would be affected if Biden’s proposals took effect.
“The gift tax (which applies to lifetime transfers) and estate tax (which applies to transfers at death) are “unified,” meaning that a single rate schedule applies to both taxes and there is a single “exemption” amount that each individual may transfer during life or at death without paying gift or estate taxes. The GST tax is an additional tax imposed on certain transfers made to persons more than one generation below the donor. The GST tax applies to transfers during life and to transfers at and after death.”
Under current law, gift, estate, and GST exemptions are currently at $11.7 million. These rates are expected to “sunset” on January 1, 2026. However, if Biden’s proposals are adopted and implemented, the rates could return back to $5 million before 2026.
Although it is not clear what changes will be adopted or made in the tax arena, it is important to stay updated and informed of what is going on.
Some things to consider:
- Retroactivity and risk
- Marital deduction
- Loans and forgiveness
Article Written by: Gerry W. Beyer
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