Even though the PPP funding has dried up and we are entering the second half of 2021, there are still businesses struggling. The good news is that leaders still have many distressed businesses financing options.

Pending Legislation Alert – Estate Planning

The 2017 Jobs Act doubled the then existing unified credit equivalent amount (“UCE”) for estate, gift and generation-skipping tax purposes; significantly increasing the amount one can pass onto their heirs’ federal estate tax free. The upshot is that today, the UCE (prior to adjustment for taxable gifts) is $11,700,000 per person, so that, because unused credits are “portable” between spouses, a married couple can have a combined net worth of $23,400,000 without being subject to federal estate tax. The changes made by the Jobs Act are scheduled to “sunset” on January 1, 2026, at which time the UCE will revert to what it was before the Jobs Act, indexed for inflation.

            A major change embodied in the pending tax legislation accelerates the “sunset” to January 1, 2022. It is estimated that as of January 1, 2022, the UCE will be around $6,000,000 per person. This means that a single individual could die on December 31, 2021, with a “taxable estate” of $11,700,000 going entirely to her friends paying no federal estate tax. If that person died a day later, her estate would pay an estimated $2,280,000 in federal estate tax.

            The proposed legislation contains provisions that would protect gifts made in 2021 from being “recaptured” in later years. Thus, those people with significant wealth, and who can afford to make gifts utilizing some, or all, of their remaining UCE before year-end, a planning opportunity arises. .

            If you are inclined to delve further into the possibility of making gifts before year-end, please reach out to our estate planning team.

            You should know that the proposed legislation also makes changes that adversely affect some of the well-entrenched estate planning acronyms like ILITs, GRATs, CLATs, QPRTs and Grantor Trusts. Additionally, the proposed rules also are designed to eliminate certain existing valuation discounts for “non-business” assets. Again, our estate planning team is available to address your concerns regarding these items.

            It is important to note that pending legislation is not the law. For changes to the Internal Revenue Code to become law, a proposal must be adopted by the House of Representatives, then the Senate, and finally signed by the President. Along the way, the political process is at work and the chance of significant changes to the proposals exist. Nonetheless, it is prudent to understand how these proposals might impact your personal circumstances, and to consider the options available to you. As the proposals now stand, the opportunity for full utilization of your current UCE will end on December 31, 2021, along with other existing planning opportunities.

Barry Weisman’s career as a tax lawyer began in 1969 in the National Office of Chief Counsel, Internal Revenue Service.
Scott Wittlin is a business and tax attorney with significant experience in advising businesses and the business owner. Scott works with business owners in addressing the complicated tax decisions they face in both their succession and estate planning. He works with his clients to maximize their tax benefits in all facets of their business and personal lives. He also assists families with probate and estate administration.

We're Excited to Announce!

Sassoon Cymrot Law and Grossman & Associates have joined together into one firm under the Sassoon Cymrot Law name effective May 1, 2021.