Members of Katten Muchin Rosenman LLP have made available for download their article, “2021 Year-End Estate Planning Advisory”, published in JDSUPRA. The abstract is as follows:
During 2021, COVID-19, the new Biden administration, the Tax Cuts and Jobs Act (TCJA), the Coronavirus Aid, Relief and Economic Security Act (CARES ACT), the American Rescue Plan (ARP), and the uncertainty about the Build Back Better Plan (BBB Plan) dominated the planning landscape.
As outlined in our previous four Year-End Estate Planning Advisories, the TCJA made significant changes to individual and corporate income taxes, restructured international tax rules, provided a deduction for pass-through income and eliminated many itemized deductions. Most significantly for estate planning purposes, the TCJA temporarily doubled the estate, gift and generation-skipping transfer (GST) tax exemptions. Absent legislative action by the BBB Plan, which may or may not occur prior to the end of the year (discussed below), many of the changes imposed under the TCJA — including the increased exemptions — will sunset after December 31, 2025, with the laws currently scheduled to revert back to those that existed prior to the TCJA. Given the uncertain political landscape, practitioners continue to view this temporary increase in exemption amounts as an unprecedented opportunity for valuable estate planning.
While the permanency of the TCJA’s provisions still remains uncertain, the current environment provides a great deal of opportunity for new planning. We are encouraging clients to build flexibility into their estate plans and to use this window of opportunity, where appropriate, to engage in planning to take advantage of the increased estate, gift and GST tax exemptions. As the existing tax landscape is still in effect as of the date of this advisory, we will review some key aspects of existing legislation before discussing how they might be changed by the BBB Plan. The following are some key income and transfer tax exemption and rate changes under the TCJA, including inflation adjusted amounts for 2021 and 2022:
Posted by Isabella King, Associate Editor, Wealth Strategies Journal.