kiplinger-retirement-2020930

There are several estate planning strategies to consider before the rules change.




This year is an opportune time to consider succession and wealth planning.

One reason is 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 because Joe Biden has called for lowering it. He hasn’t given an exact figure, but it could revert to pre-2018 levels of about $5 million ($10 million for couples), with inflation adjustments.

Here are two estate planning strategies to consider now before the rules change:

  • You can give up to $15,000 to each child, grandchild or any other person in 2020 without having to file a gift tax return, pay gift tax or tap your exemption. The recipient isn’t taxed on the amount received either.

Gifts made in 2020 that exceed the $15,000 per person limit will require the donor to file a gift tax return using IRS Form 709, but no gift tax will be due in 2020 unless your total lifetime gifts exceed $11,580,000. If you’ve been thinking of making a large gift to a family member, now might be the time to do it.

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