Proposed legislation recently introduced in Congress has the potential to significantly alter major estate and gift planning strategies.
So here’s what you need to know – if you’re planning for exemptions from federal estate, gift, and generation-skipping transfer taxes, currently set at $11.7 million per individual, this will be in effect until December 31, 2025.
However, if the new legislation passes, by December 31, 2021, the end of this year, you may be left with only approximately $5 million in exemptions.
Estate Planning Attorney Randy Doane of Doane & Doane says: “If Congress enacts the new plan, legislation will significantly limit the use and effectiveness of many irrevocable gifting trusts. These irrevocable trusts, such as Grantor Trusts, have been a common and popular tool used as a gifting vehicle to hold monies for spouses, children and grandchildren. This provision would pull the trust assets back into the decedent’s taxable estate.”
These trusts include certain life insurance trusts, grantor retained annuity trusts, intentionally defective grantor trusts, and spousal lifetime access trusts. There are many nuances and uncertainties in the proposed reforms.
Changes affecting grantor trusts may be effective as soon as the legislation is enacted, likely prior to the end of 2021. The window of opportunity to take action with respect to grantor trusts may be rapidly closing.
So the time to act is now. If you have questions about updating your estate plan, the experienced attorneys at Doane & Doane will be there for you with the answers. Find them online today at doaneanddoane.com.