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The Time to Act is Now

As we kick off 2021, we are pleased to have completed some valuable estate tax planning for clients during the year-end rush. 2020 undoubtedly represented a year which provided some of the best opportunities to implement planning strategies that addressed estate and income tax, asset protection and legacy planning initiatives.

With Democrats projected to win the Georgia Senate runoff races, there is a distinct possibility that we will have a Senate that will be evenly split. That means that, in the event of a tied vote on a tax bill, Vice President-elect Harris will cast the deciding vote. If this comes to play, it is more likely than not that the Democrats will be able to substantially reduce the federal estate, gift and generation-skipping transfer tax exemption amount from the current $11.7 million level, as they have proposed. While this reduction of the exemption amount could be made retroactive to January 1, 2021, that seems like the less likely scenario, for a number of reasons. The reduction of the exemption amount may be further accompanied by an increase in the top tax rate for federal estate, gift and generation-skipping transfer tax from 40 percent to 45 percent.

Given the foregoing, wealthy clients face a “use-it-or-lose-it“ opportunity for estate tax planning. It is important to note that fully utilizing this increased exemption amount prior to a reduction thereof could save millions in estate tax, and even more if the transferred property appreciates before the donor's death, given that the gift removes both the property and the future appreciation from the estate tax base.

For those who heeded our advice to take action and make gifts using their exemption amount prior to the end of 2020, there are still opportunities to take advantage of any remaining exemption amount or to make gifts that will not use any exemption amount, but will still reduce their otherwise taxable estate. A number of these vehicles may not be available in the near future, as the Democrats have proposed legislation in the past to curtail or eliminate these valuable estate planning techniques, and it is anticipated that they will do so again.

The bottom line is that, given that the political landscape looks favorable in terms of proposed tax legislation coming out of the Biden administration getting passed, the time to act is now. Please email us at if you would like to schedule a call to further discuss the foregoing.


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