What’s Next For Gift Tax Exclusions And Estate Taxes?
‘Tis the season when many financially secure parents engage in a back-and-forth about holiday gifts with their children who are probably living paycheck to paycheck, despite their efforts to keep their parents from discovering this fact. The conversation usually starts out with a gentle proposal not to give holiday gifts this year and subtle questions about the adult son or daughter’s plans for the next year. The parents offer to help with those plans, whether they include purchasing a house or car, pursuing a master’s degree or professional degree, or enrolling a child in preschool. The kids may resist, but the parents are often able to persuade them to accept the money because it is tax free now, but it may not be that way in the future. The annual gift tax exclusion has been the source of many a windfall for millennials whose parents can afford to give cash gifts, but the future of the annual gift tax exclusion is uncertain. The lifetime tax exclusion is scheduled to sunset, but it is too soon to know when or by how much? A Tampa estate planning lawyer can help you maximize your gift giving this year and then deal with the changes when they arrive.
The Twilight of the $11 Million Gift Tax Exclusion
In 2021, you can give cash gifts of up to $15,000 per recipient tax free, and you can give these gifts to as many recipients as you choose. The lifetime limit for tax free gift giving is $11 million. That will certainly change by 2026, when the lifetime limit will change to $6.2 million. It may change even sooner than that, since the parts of the Build Back Better economic recovery plan that involve limiting tax exclusions for the wealthy are still being worked out. The lifetime tax exclusion may change as soon as the beginning of 2022. This means that, even if your net worth is less than $6.2 million, you should take this opportunity to give all the cash gifts you have been debating whether to give.
Estate Tax Loopholes May Close
People often seek the advice of estate planning lawyers to help them find ways to pass as much wealth to their heirs without the heirs being responsible for estate taxes on certain assets. Grantor retained annuity trusts, intentionally defective grantor trusts, and holding assets in the name of LLCs are popular ways to keep assets from becoming part of one’s estate subject to estate tax. Restrictions on these types of estate tax loopholes may increase in the near future. You should work with your estate planning lawyer to find the best legal ways to keep your assets out of probate.
Contact David Toback About Keeping Your Estate on the Right Side of the Law
Tax laws change all the time, and an estate planning lawyer can help you save money on taxes while complying with the current version of the laws. Contact David Toback for help today.