2020 Year-End Gift Tax Planning

September 23, 2020

If the upcoming election results in Democratic control of the White House and Congress, significant changes to the gift, estate and generation-skipping transfer tax regime are likely, and, while far from certain, those changes could have an effective date of January 1, 2021.

In particular, the current $11.58 million exemptions from the gift, estate and generation-skipping transfer tax ($23.16 million for a married couple) could be significantly reduced.  Furthermore, other estate planning techniques, including discount planning with family limited partnerships and LLCs and the use of GRATs, could be eliminated or substantially curtailed.  (For a discussion of these techniques and lifetime giving in general, see our 2018 Alert Memorandum). 

Given the uncertainty regarding the timing of these potential changes, we recommend that clients who are interested in locking in all or part of their currently available gift and generation-skipping transfer tax exemptions or making use of other planning techniques do so as soon as practical or, at a minimum, have a plan in place that can be implemented promptly after the results of the election are known.  Waiting until after the election may result in an inability to take advantage of certain techniques that require a period of time to implement.  In addition, lead time may be required if a gift will involve establishing new accounts at financial institutions.