Wealthy people in Wisconsin know all about the estate tax exemption that was passed in 2018 as part of the Tax Cut and Jobs Act. That piece of legislation essentially doubled the amount of non-taxed gifts that people were able to leave to their family members. Unfortunately, this provision is set to expire in 2025. There is also a presidential election coming up, with one candidate pledging to raise taxes on the rich.

Planning for the future now

Now is the time for people with complex estates to think about how they want their property to be distributed. It may be prudent to give away more property before the exemption changes. However, it’s important to remember that gifts can have strings attached. Legally, giving property away means losing control of it.

Another great option for estate planning is creating a spousal lifetime asset trust. The one risk with this is that due to asset appreciation, the beneficiary may face a higher than expected tax burden. However, there are some ways to avoid this. Adding substitution power provisions to the trust is a measure that should be carefully discussed with an estate planning attorney.

Finally, 2020 has been a year of low interest rates. This may be a good time to find ways to transfer assets to loved ones. Using strategies like intra-family loans when interest rates are low can be a great alternative to paying a heavy tax burden at some point in the future. Tax considerations for estate planning are always evolving. Sometimes, it’s good to take action while the laws are still favorable for people who have complex estates.