BY CONNOR STEENS
2021 saw thousands of families rush to get their estate strategies in order, as significant changes to current estate tax laws were set in motion. A tax bill released in the middle of September set an early expiry date for the generous gifts and estate tax system introduced in the 2017 Tax Cuts and Jobs Act (TCJA).
The bill looked to substantially reduce the amount Americans can pass on at their death, free of tax, and it was anticipated that these changes would be implemented in late 2021 or early 2022. This induced a frantic rush for estate planners and tax attorneys alike, as wealthy families looked to prepare for the worst. Just as suddenly however, a later release of the proposed tax bill removed all provisions relating to the estate and gift tax system, much to the relief of wealthier Americans.
While the storm seems to have calmed for now, those that may be affected should ready themselves for the potential changes that may still be looming and with the current exemptions in place under the TCJA, 2022 is the perfect opportunity to do so, especially as the Biden administration looks to fund the $1.75 trillion Build Back Better bill in the New Year.
Currently, the TCJA sets the exemptions at $11.7 million per person or $23.4 million per married couple. This provision was due to sunset on December 31, 2025 and revert to the original amount of $5 million per person, meaning that those affected had until 2025 to adjust their estate plans. The potential legislation however, would have reverted the exemption back to $5 million per person immediately, and introduced a provision that would render grantor trusts ineffective. This prompted many Americans to establish and fund grantor trusts as this deadline approached.
Although these plans were put on hold, with such immediate changes being proposed at breakneck speed, those with estate planning on their radar should be acting sooner rather than later. Preparing for the long term eventualities of these proposals could save families millions in estate tax. By establishing and funding an offshore trust with Southpac, your estate and wealth is ultimately better protected from these proposals should they suddenly resurface in the future.
Contact us here to get your wealth planning journey underway.