Beginning in 2018, the exemption amount for estate and gift tax doubled to $22.4 million for a married couple, up from $11.2 million. Thus, affluent taxpayers can remove more assets from their taxable estates and avoid estate tax in perpetuity for the benefit of their children and future descendants. Many of these taxpayers should take advantage of the increased gift amount before the law sunsets in 2026. The 2018 law allows taxpayers who previously gifted the full $11.2 million exemption, and correctly believed they maxed out the amount they could protect, to now transfer another $11.2 million.
Of course, federal laws can be changed by Congress and the President at any time. It is conceivable that two Congressional elections and the next Presidential election could result in Democrats controlling these two branches of government. It is worth remembering that President Obama and Candidate Clinton proposed a $7 million exemption for a married couple. Thus, acting sooner than later, or at the least monitoring the political climate, is imperative for those with 40% of their estate at risk – the federal estate and gift tax rate for taxpayers with assets exceeding $22.4 million…for now.