Armanino Blog
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Estate Planning - Gifts You Can Still Access

by Pam Dennett, Miho Ikeda, Jun Tamahashi
May 12, 2020

Married couples with a net worth of $12 million and up should consider this estate planning technique.

As you may know, the 2017 Tax Cuts and Jobs Act ("TCJA") changed the estate and gift tax regime by increasing the amount of assets an individual may pass to their heirs tax-free (referred to as the "lifetime exemption"). The amount of assets (lifetime exemption) that can pass without being subject to the 40% estate/gift tax for 2020 is $11.58 million per person ($23.16 million for a couple). What you may not be aware of is the change to the estate and gift tax regime is "temporary" and currently set to expire on January 1, 2026, if not sooner. It is important to consider the fact that political winds do shift and although we cannot predict any future outcomes, our past experience tells us that if there is going to be a policy change related to the estate tax regime, it will likely be unfavorable to taxpayers and could happen as early as 2021. The lifetime exemption may be reduced back down to $6 million per person ($12 million for a couple).

USE IT OR LOSE IT. Married couples who are contemplating gifting assets to trust for heirs but are worried they may need access to those assets at a future time should consider certain types of trusts that allow spouses to be beneficiaries and have access to the assets, if needed. This technique allows you to utilize the lifetime exemption yet continue to benefit from the assets in the future. With market values at an all-time low, now is the time to seriously consider making gifts and utilizing your remaining lifetime exemption before you lose it.

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