President Joseph Biden campaigned on lowering the current $11.7 million tax exemption amount to $3.5 million per individual and increasing the estate tax rate from 40% to 45% on amounts exceeding the exemption. When the anticipated upcoming transfer tax changes will go into effect is not known, and the timing and exact changes to gift and estate tax laws are unknown. The result is, 2021 may be the time to gift.
The Federal gift, estate and generation-skipping transfer (GST) tax exemptions (i.e., the amount an individual can transfer free of any of these taxes) increased to $11.7 million in 2021. Federal and Illinois tax laws provide an opportunity to transfer significant amounts of wealth free of any federal gift, estate and generation-skipping transfer (GST) taxes. Some of the gifting provisions “sunset” on January 1, 2026, which make now an ideal time to review your estate plan to ensure that you are making full use of this opportunity.
It is possible to “lock in” the $11.7 million tax exemption by gifting to an irrevocable trust ($23.4 million for married couples). This does not impact the majority of people. But what does impact most people is the need to take a close look at their estate plan, ensure that they are taking a close look at gifting, trusts and other opportunities do exist to protect your assets and generational wealth.
Estate planning goals change over time. Make sure that your estate planning legal documents reflect your current wishes and strategically account for federal and state tax exemptions so that your beneficiaries and heirs and protected.
• Lifetime utilization of transfer tax exemption
• Annual exclusion gifts
• Tuition and medical gifts
• Gifts to spousal lifetime access trusts
• Grantor trusts
• Combining gifting and selling assets to grantor trusts
With the anticipated upcoming transfer tax changes, there are many year-end benefits to reviewing your estate plan in addition to gifting and gift taxes. Revisions to your legal documents may be necessary if your family circumstances have changed significantly, such as a birth, death, wedding, divorce or relocation to another state
Do you have questions about estate planning? Our experienced estate planning lawyers in Lombard, Illinois can advise you on the best options to protect your assets and loved ones. To talk to an estate planning attorney contact the Estate & Probate Legal Group at 630-864-5835.
We provide legal services in Cook, DuPage, Kane, Lake, and Will counties.