While most in Baton Rouge last month were shopping for Christmas gifts, Kevin Curry, a partner with Kean Miller, was busy helping clients looking to sell their businesses or other investment property before the end of the calendar year.
Their actions were being driven by fears that the new presidential administration will reduce the estate tax exemption sooner than scheduled.
For the past two years, as part of President Donald Trump’s tax overhaul, the federal estate tax exemption was set at more than $11 million per individual. In late October, the Internal Revenue Service announced that the estate and gift tax exemption for 2021 would be $11.7 million per individual. Absent an extension by Congress, the high exemption rates would end in 2025, but President-elect Joe Biden is reportedly considering switching back to rates under the 2009 law, which would reduce the exemption to $5 million or $3.5 million, with increased tax rates on top.
Adding to the worry are anxieties that any changes made to tax policy would be retroactive to the beginning of 2021, increasing the pressure to decide whether to give big before the end of the year to take advantage of the current exemption, or risk being told in late 2021 that you will have to pay taxes on a multimillion gift given earlier in the year.
Read the full feature from the latest edition of Business Report for more about how to prepare for the possible tax changes.