Tax Planning Strategies for the 1% Are a Gamble
The Tax Cuts and Jobs Act of 2017 (TCJA) became law in 2018 and gave wealthy families a lot to celebrate. In addition to many tax reforms that benefit most taxpayers, the TCJA increased the federal estate and gift tax lifetime exclusion amount from $5 million per person to $10 million per person (plus annual inflation adjustments). Those annual adjustments result in an effective exclusion amount for 2020 of $11.58 million per person and over $23 million per married couple. With portability, a surviving spouse can add a deceased spouse's unused exclusion to his or her own.
But, to avoid completely blowing up the national debt, like all recent tax laws, the TCJA must be set up as a temporary reform. The TCJA "sunsets," or terminates, on the first day of 2026, so those higher tax rates can return on estates much smaller than today. There is always the possibility of a repeal, amendment or an extension of TCJA. Doing nothing, of course, is much easier than actually raising taxes.
