Concerns about a reduction in the U.S. Estate and Gift Tax exclusions? Make a gift now to benefit from historical exclusion levels.

The U.S. Treasury provided clarity for estate planners and their clients by issuing regulations that confirm that individuals who make gifts now seeking to benefit from current exclusion levels (basic exclusion amount of $11.4 for 2019) will not be adversely impacted after 2025 should the exclusion sunset and revert back to pre-2018 levels ($5million for 2017).

Treasury Decision 9884 codifies the benefits described above and clarifies the issue by including technical language and examples that address the concerns of estate planners and others. The Treasury addressed these issues by providing that an estate may compute its estate tax credit using the higher of the BEA applicable to gifts made during life or the BEA applicable on the date of death. Pursuant to these changes, estate planners can confidently advise clients that make large gifts between 2018 and 2025 that they can do so without concerns that such gifts will trigger higher taxes than anticipated due to a sunsetting of current exclusion levels.

The current gift and estate tax structure provides for a basic exclusion amount (hereinafter “BEA”). The exclusion is first used during life to offset gift tax. Any remaining credit is available to reduce or eliminate applicable estate taxes. The 2019 BEA (adjusted for inflation) is $11.4 million. The BEA will revert to $5million (adjusted for inflation) in 2026 if no additional action is undertaken. 

Rate this article
3 Rates (53 %)

Do You have any Questions?

We look forward to assisting you. For the sake of simplicity and efficiency, we request that you use our contact form for your inquiry and describe the matter as clearly as possible. In addition, you can include relevant attachments. After submitting your inquiry, we will contact you either by telephone or e-mail within one working day. If we can assist, we will suggest a time and date for an initial consultation. Of course, you can also contact this firm or a particular attorney directly to make an appointment for a personal consultation or telephone consultation (find contact details here). Please be advised that no attorney-client relationship is created by sending us an email or filling out this contact form. For information on our fees, please click here.