Use It or Lose It — The Current Tax Law

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Today, I want to talk about the concept of “use it or lose it,” and how it pertains to the current tax law for wealthy clients. At the time of this blog, there are two weeks to the next presidential election. During Donald Trump’s time in office, he significantly increased the lifetime exemption amount to $11+ million for each of the husband and wife to gift or leave in their estate. That means that up to $22 million and change, indexed for inflation, can be passed federal estate tax free. So, let’s say I gave away my $11 million and my wife gave away her $11 million, that money will continue to grow outside of, or without inclusion in, the estate.

Now, many people believe that if Donald Trump is not reelected, that the new president and the new Congress will look to immediately change a lot of the estate tax rules that were developed under the Trump administration. Even if he is reelected, however, the rules pertaining to the lifetime exemption will sunset, meaning that the $11 million that I could give away or leave tax free — and the $11 million that my wife could either give away or leave tax free — will be cut in half come December 31, 2025.

With a sense of urgency, today is the day that wealthy people should be considering making those gifts to either their adult children or to a trust for the benefit of their heirs and children. The IRS has already said that they would not claw back those gifts in the event of the law sunsetting.

Even if they changed the law or reduced the exemption as it would have been reduced come 2025, there is no better time to make those gifts. It’s kind of like asking when is the best time to plant a tree? Well, it would have been better if I had done it 20 years ago, but today is the day. Today is the best time.

I have included a very detailed analysis by Brad Dillon from Steve Leimberg’s Estate Planning Email Newsletter Archive, for you to read about this subject matter in more detail.

Plan Now or Forever Lose Your Exemptions!

If you would like to get more information or would like to work on creating your estate plan with proper legal documents — wills, trust, durable power of attorney, healthcare proxy, powers of attorney — let us know. This is where we specialize: helping people plan and organize their financial affairs for a safe retirement and investment planning.

Thank you very much and have a great day.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS.  Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

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This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions.American Portfolios Financial Services, Inc.(APFS) and American Portfolios Advisors, Inc.(APA) are not affiliated with any other named business entities mentioned.