NEWS & INSIGHTS

While all eyes were on the election, the Internal Revenue Service announced the official estate and gift tax exemptions for 2021. The annual gift exclusion will remain the same, allowing individuals to give $15,000 to as many individuals as desired, each year. The federal estate tax exemption will increase from 2020’s $11.58 million to reach another record high at $11.7 million per person for 2021. This means an individual could shield $11.7 million from federal estate or gift taxes, and a married couple could safeguard $23.4 million with proper planning. While the IRS’s 2021 federal estate and gift tax exemption announcement was official, the exemption amount is far from certain. In 2026, the exemption is scheduled to revert to $5 million indexed for inflation. However, President Elect Joe Biden proposed reducing it even further to $3.5 million per person. With uncertainty still looming around Democratic or Republican control of the [...]

If you are thinking about gifting assets before year-end, consider creating an irrevocable trust to receive the gift. You can name the intended gift recipients as the trust beneficiaries, such as children, grandchildren, and even your spouse. With proper planning, your spouse can be both the primary beneficiary and trustee of the irrevocable trust, providing some control over the gifted assets. This is commonly known as a Spousal Lifetime Access Trust (SLAT). Children and grandchildren are typically included as secondary beneficiaries, so the trustee can distribute assets among your descendants too. SLAT planning offers a flexible way to provide for different generations of your family while removing assets from your taxable estate. Gifts to a SLAT will use your lifetime exemption from federal estate tax, but will allow the trust's assets to pass to your children estate tax free. If you apply the generation-skipping transfer tax (GST) exemption, the trust's assets will [...]