Proactive estate planning moves in an election year

The connection between presidential politics and estate planning is undeniable, as policies tend to change depending upon who sits in the White House.

That’s why it’s essential, especially for high-net-worth individuals, to review your current estate plan and examine strategies that allow you to benefit from the current favorable environment.

Gift transfer tax exemption

One of the most significant opportunities for wealthy individuals is gifting up to $11.58 million to another party free of a federal transfer tax. This 2020 exemption is over double what it was four years ago. While the higher exemption is due to expire in 2026, that could change depending upon the election outcome.

High-net-worth estate planning strategies

Several ways exist for estates between $10 million and $20 million to benefit from current laws that reduce estate tax liabilities. Choosing the best strategy depends upon whether you want to maintain access to assets removed from their taxable estate or intend to transfer them to the next generation. Consider these options depending upon your goal:

Goal: Benefitting from assets and appreciation removed from the taxable estate:

  • Beneficiary Defective Inheritor’s Trust or BDIT
  • Spousal Lifetime Access Trust or SLAT

Goal: Transferring assets and appreciation to future generation:

  • Gift or sale of interest in family partnerships
  • Grantor Retained Annuity Trust or GRAT

Goal: Supporting charities while also benefitting heirs or grantors:

  • Charitable Remainder Trust or CRT
  • Charitable Lead Trust or CLT

Preserving your legacy by protecting assets

Each of these strategies is complex and should be examined with an experienced estate planning attorney’s help. While taking advantage of current laws can offer substantial gift-tax and estate savings, your lawyer will help ensure that any action you take meets your objectives.

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