When you pass away, your estate could be taxed above certain thresholds established on an annual basis. This has risen to $11.7 million in 2021 with an exemption that is set to expire at the end of 2025. However, it is possible that legislative and fiscal pressures could push a change to occur sooner rather than later.

This large exemption means that many people have put off the process of estate planning altogether but this could be a significant mistake. The federal estate tax and gift tax is currently 40% on those amounts over the $11.58 million threshold in 2020.

This is outside of the fact that some individual states can also levy their own estate tax. If the gift exemption is decreased by a lot by any oncoming legislation, this will make it very challenging for people with higher amounts of assets to minimize their taxable estates. This is why it’s important to have an established relationship with an estate planning lawyer to help keep you aware of these issues and help you to navigate these circumstances when they occur.