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Death tax legislation languishing in Congress

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Efforts to extend the 2013 estate tax relief bill have languished in Washington, D.C.
Estate Planning: Prepare now in case the 2013 tax relief bill sunsets at the end of 2025.

So, where does the death tax conundrum stand now? As Congress has been unable to get legislation to the desk of the President, the status quo remains in place. So what does the estate tax situation look like for calendar year 2022?

The death tax exemption increases for inflation in 2022 to $12,060,000. However, don't lose sight of the sunset provision in the 2013 legislation that cuts that number in half at the end of 2025. Even if Congress remains deadlocked.  Effective planning will allow you to double that number for married couples.

The annual gift tax exclusion increases to $16,000 per donee for 2022. Again, adjusted for inflation.

What might we expect if Congress were to put together a coalition that could get legislation through to the President?

Based on the negotiations at the end of 2021, here are some things to expect if momentum builds again to get legislation passed.

  1. They will attempt to move forward the sunset scheduled to occur at the end of 2025. Effectively doubling the tax on larger estates sooner than scheduled.
  2. They will work to try to reduce leveraging techniques which allow for increased gifting through effective estate planning. Or, more simply said, they will take away some planning techniques available to reduce taxes for larger states. These changes will make reducing death taxation an increasingly difficult undertaking.
  3. They will attempt to reduce the length that families can exclude their farm or ranch from the estate tax in future generations. With effective planning you can pass the property onto future generations in perpetuity without further death taxation. Many in Congress are pushing to create a limit of 50 years before it must again be subject to death tax.

What should we do now to put our families in the best position to succeed? Well, it depends!

The size of your estate, and what you are shooting for as an outcome, will determine the best strategy for your family. There are a lot of tools and techniques a qualified estate planning attorney can put to work for you. Choosing the right tools to accomplish your goals are critical to the success of your plan.

We don't know what Congress will do in the future. I think most of us would agree that taxes are going to increase. The best recommendation I can make is to plan now, clearly establish the result you want your plan to accomplish, apply currently available strategies (while they are available), and then work closely with your estate planning attorney to make adjustments as the environment changes. This will give you, and your family, the best chance for success.

Dolan, an attorney, helps farm and ranch families achieve comprehensive estate, succession, and legacy planning objectives. Dolan is the principal of Dolan & Associates, P.C. in Brighton and Westminster, Colo. Learn more on his website:

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