Estate Planning: Post Georgia Runoff Election
After the 2020 election and Georgia runoffs, Democrats now control both the House and the Senate. This has the potential to have a significant impact on estate and wealth transfer planning in 2021 and going forward. Part of President Biden’s tax agenda includes reducing the estate tax exemption to Pre-TCJA levels (one-half of the current $11.70 million 2021 exemption) or possibly lower.
The next question is naturally, when will this occur? National experts have weighed in on the three potential options:
- Retroactive to 1/1/2021 – While it is possible that a change in the estate tax exemption gets applied retroactively to 1/1/2021, this seems unlikely as it would have an adverse impact on taxpayers already in the midst of estate planning. A retroactive change would also create complications for personal representatives of estates that may have already prepared and filed estate tax returns for decedents that passed away in 2021.
- Date of enactment – Again, this is possible, but it would bring all the typical complications of any mid-year tax law changes including increased complexity with tax reporting.
- Effective after 12/31/2021 – Practically, this appears to be the most the likely result. There is no way to know for sure, but we should have more clarity once more details of Biden’s tax plan are released.
For high net worth individuals, there is now more urgency to reach out to your attorney and/or accountant to see how a potential law change could affect you and determine if any planning should be done.
Nothing has happened yet, but it is important to be proactive. Estate planning can be a time-consuming process, so the earlier you start the discussion, the better. Please reach out to us if you have any questions or if you would like to discuss how the potential estate tax law change could affect your unique situation.