Now’s the Time for Estate Tax Planning
Two factors make this year an opportune time to consider succession and wealth planning. First, the federal estate and gift tax exemption is at a historic high of $11,580,000 in 2020—$23,160,000 for couples if portability is elected on a federal estate tax return. Portability allows a married decedent’s unused estate and gift tax exemption to pass to the surviving spouse. The tax rate is 40%.
This exemption amount expires at the end of 2025, but if the Democrats win big in November, odds are good the exemption will fall sooner, perhaps as early as 2021, because Joe Biden has called for lowering it. He hasn’t given an exact figure, but we think the exemption could revert to pre-2018 levels of about $5 million ($10 million for couples), with inflation adjustments.
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