Estate Planning Update

July, 2021

1. 2021 Annual Gift Tax Exclusion: remains at $15,000 per donor, per donee.
2. 2021 Gift and Estate Tax Exemption: increased to $11,700,000 per donor through 2025, see #6.
3. Marital Deduction for Transfers to U.S. Spouse: unlimited.
4. 2021 Generation Skipping Tax Exclusion: increased to $11,700,000 per donor through 2025, see #6.
5. Top rate for Federal Estate, Gift and Generation Skipping Taxes: 40%.
6. National Topics: The full impact of the COVID-19 virus and last fall’s election on estate tax planning has yet to be felt. President Biden has indicated his intent to reduce the Federal Estate Tax and Gift Tax Exemption to $3,500,000 and other tax increases to fund the stimulus packages, but this may get lost in other more significant agenda items, such as the infrastructure package. If reducing the exemption is doubtful in the short term, the change in the legislature probably means that the current doubling of the Federal Gift Tax Emption will surely be allowed to expire at the end of the 2025.  Here is a chart to determine what action you should take over the next couple years depending on the current value of your estate:

Individuals Married Couples Action
<$3,500,000 <$6,000,000 No worries, little risk of estate tax at death.
$3,500,000-$6,000,000 $6,000,000-$12,000,000 Keep an eye on the news and take action if the estate tax exemption amount is lowered below the value of your estate.
$6,000,000-$12,000,000 $12,000,000-$24,000,000 Time to start reviewing your alternatives as your estate will most likely go from non-taxable to taxable at the end of 2025.
$12,000,000-$24,000,000 $24,000,000-$48,000,000 Your estate is taxable today and depending on your age and objectives, your beneficiaries may benefit from implementing certain techniques now rather than later.
$48,000,000+ This group has received a lot of attention lately and is more than likely facing additional estate taxes in the future.  Therefore, structuring your assets appropriately will minimize the estate tax burden at death.

There are many actions available to achieve your objectives, including naming the correct beneficiaries on retirement assets, obtaining a new life insurance policy to cover the tax, accelerating gifts to your beneficiaries and shifting future appreciation out of your estate. Please call and schedule an appointment if you want to discuss how you can take advantage of this window of opportunity.

Quinn News: Quinn spoke at the Arizona State Bar Convention last December on the new LLC Act’s Ramifications for Operating Agreements. The recorded seminar is available to attorneys on the State Bar’s website.  While we have been able to keep hourly rates steady for the last six years, our hourly rates have changed for new clients and will change for current clients beginning January 1, 2022 as set forth in the notice mailed to clients.