Wealthy families are transferring millions of dollars of asset value ahead of the looming reduction to the federal estate, gift, and generation-skipping transfer tax exemptions (federal exemptions).
The reasons are many—but begin with the passage of the Tax Cuts and Jobs Act of 2017 (TCJA). When the TCJA passed, the federal exemptions doubled, increasing the 2017 federal exemptions from $5,490,000 (the then $5,000,000 exemption, as indexed for inflation) to $11,180,000 in 2018. As of 2021, the federal estate and lifetime gift tax exemption is $11,700,000 per individual ($23,400,000 for a married couple, with portability). However, the TCJA will sunset on Dec. 31, 2025: on Jan. 1, 2026, the federal exemptions will reduce to $5,000,000, as indexed for inflation.
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