May 12, 2020
Estate Planning – Gifts You Can Still Access
Posted by Pam Dennett
Married couples with a net worth of $12 million and up should consider this estate planning technique.
As you may know, the 2017 Tax Cuts and Jobs Act (“TCJA”) changed the estate and gift tax regime by increasing the amount of assets an individual may pass to their heirs tax-free (referred to as the “lifetime exemption”). The amount of assets (lifetime exemption) that can pass without being subject to the 40% estate/gift tax for 2020 is $11.58 million per person ($23.16 million for a couple). What you may not be aware of is the change to the estate and gift tax regime is “temporary” and currently set to expire on January 1, 2026, if not sooner. It is important to consider the fact that political winds do shift and although we cannot predict any future outcomes, our past experience tells us that if there is going to be a policy change related to the estate tax regime, it will likely be unfavorable to taxpayers and could happen as early as 2021. The lifetime exemption may be reduced back down to $6 million per person ($12 million for a couple).
USE IT OR LOSE IT. Married couples who are contemplating gifting assets to trust for heirs but are worried they may need access to those assets at a future time should consider certain types of trusts that allow spouses to be beneficiaries and have access to the assets, if needed. This technique allows you to utilize the lifetime exemption yet continue to benefit from the assets in the future. With market values at an all-time low, now is the time to seriously consider making gifts and utilizing your remaining lifetime exemption before you lose it.
Pam brings to Armanino over 29 years of expertise in the estate, gift and trust tax area. Pam’s clients have been primarily high net worth multi-generational families, closely held business owners, executives, fiduciaries (corporate and individual), family offices, and beneficiaries of large estates/trusts. Prior to joining Armanino, Pam was a national resource for Deloitte as a subject matter expert in the areas related to estate tax, gift tax, post-mortem tax planning, fiduciary income tax and generation-skipping transfer tax and was an advisor to corporate trustees. Pam also spent 7 years with Goldman Sachs Private Wealth Management as a Senior Wealth Strategist covering Southern California, Texas and Las Vegas providing comprehensive planning to some of the wealthiest clients at Goldman Sachs focusing on tax planning related to estate, gift, generation-skipping transfer tax, income tax, charitable giving, family office services, transactional tax planning, stock option planning, and post-mortem tax issues.