Every 2-4 years, a change in Congress or our President results in a mini-barrage of newsletters, workshops (well webinars during covid) and other literature detailing the changes. This year is no exception as increased spending associated with the pandemic has increased the likelihood of future tax increases on capital gains and larger estates.

Over last 20 years, exemption has quickly climbed from $675K to current $11.7M per person (doubled for a married couple).

Interesting fact, in the 100-year history of the US estate tax, it’s never gone down. I’m not a prognosticator, but I am an educated guesser and I’ve been guessing that the exemption will drop by 2026 to $5-$6M. With the results of the recent elections giving Democrats control of the presidency, house and senate, it’s very likely that we’ll end up in the $5-$6M range sooner than 2026. More aggressively, the incoming president has proposed dropping the exemption to $3.5M per person AND lowering the gift tax amount to $1M.

Ok, what does all of that mean? If you’re a single person with $4M+ of assets or a married couple with $8M+ of assets (or well on your way to those numbers), we need to check in and discuss.

Do you need to panic and feel like the estate planning world is ending since these laws could potentially be enacted retroactively to January 1st? Not necessarily. Congress has its hands full right now and this isn’t necessarily their top priority. Additionally, with such a closely divided legislature, perhaps Congress will be looking more for incremental action rather than dramatic overhauls.

As part of our ongoing Legacy Program, we will continue to educate our clients and their loved ones and collaborate with their trusted advisors and make changes to their estate plans as appropriate based on changes in the law and changes in our clients’ lives. Please note however, that the conversations we have in 2021 will repeat every two to four years as a new Congress and new President take office. These laws change ALL the time! That’s one of the important reasons we established our Legacy Program. We want to communicate with our Legacy Program members on an ongoing basis to make sure that we monitor legal changes and discuss and implement appropriate changes to their plans.