Page 33 - Grapevine SeptOct 2021

In The Winery

Estate and Gift Tax Law

As noted previously, the current gift, estate and
generating skipping tax (GST) exemption amount
is approximately $11.7 million per individual. This
exemption amount is currently required under the
law to be cut by 50% in 2026, to about $6 million
per person, depending on adjustments made for
inflation. This reduction is built into current law,
and it has created a use-it or lose-it opportunity for
high-net-worth individuals. However, the following
Biden proposals are even more dramatic:

• Reduce the estate and GST exemption to $3.5
million and only permit $1 million in tax-free
lifetime gifts.

• Increase the estate tax rate significantly from
40% up to a 65% top rate.

• Eliminate the stepped-up basis rules at death.
This would be a significant change as a carry-
over basis may create an income tax at death
(“death tax”) or upon later sale on all appreciat-
ed property.

• Limit valuation discounts between family mem-
bers.

Changes to Gift Tax Exemption Laws • Include grantor trusts in the grantor’s estate
and eliminate use of short-term grantor
retained annuity trusts (GRATs) and sales to
Could Affect Winery Estate Planning intentionally defective grantor trusts (IDGTs).

• Limit duration of GST trusts.
By: Kemp Moyer and Sachi Danish, BPM LLP
The above proposals make it urgent to address
your estate tax planning now, rather than waiting
for what the future may bring, although planners
must also consider the possibility of retroactive law
changes.

Some estate and gift opportunities to consider
under current law include:

• Use your annual exclusion gifts of up to $15,000
per person ($30,000 if both parents make gifts
to that individual). Over time, these gifts can
accumulate into significant amounts. These

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