With the recent change of which party controls both the Executive and Legislative branches of our government, it is very likely that significant changes will be made to the current estate tax laws. Currently, the federal estate tax exemption is $11.7 million per person or $23.4 million per married couple. Since Ohio law has no estate tax, this means that no estate tax is owed unless the total value of an estate exceeds these aforementioned amounts.
However, under a Biden administration these numbers are projected to drop significantly to anywhere between $3-$6 million per person. Moreover, the estate tax which currently sits at 40% percent may also be raised to 50-55%. Accordingly, the potential impact on those families with a net worth north of $5-10 million is quite substantial.
In order to avail to lock in the use of the current exemption amount, many clients are electing to make large gifts before any change can become law vs. waiting to see how the year plays out. By acting now, it is likely that a significant amount of wealth can be transferred tax-free in order to avoid the disastrous consequences of waiting until it is too late. Historically, tax-law changes have not been retroactive so the general consensus among experts is that any transfers made prior to the new law being enacted will be impacted.
Contact our office today to discuss what the next steps are if you would like to take advantage of the current estate tax law before your window to implement a new plan and save significant money for your family closes.