The passing of the Tax Cuts and Jobs Act in 2018 doubled the estate lifetime exemption. The exemption for 2020 is $11,580,000 per person, the highest it has ever been. Next year, the exemption will change to $11,700,000. The exemption amounts are slated to expire at the end of 2025, dropping to one-half of the present level. It is likely, however, that changes will come sooner. President-Elect Biden has indicated that he wants to decrease the lifetime exemption prior to 2025. If this reduction is agreed upon by Congress, and the provision is passed by December 2021, it could become retroactive in January 2021. If you are considering using your exemption before 2025, the time might be now…. If so, you will need to take advantage of your large exemption by December 31, 2020.

The IRS has already indicated that there will be no clawback on lifetime gifts. This means that any gifts made under the current exemption will not be subject to estate taxes in the future, even when the exemption is reduced.

Please note that you must make gift assets a complete gift, foregoing any ownership, control, or use of the assets in the future. If you have concerns over loss of ownership, it is possible to create certain trusts to ease the burden and to help provide income for your lifetime.