ArticleSupreme Court Ruling Could Hike Taxes When Business Is Passed
The revenue portion of the Build Back Better Act (BBB) that is moving along dramatically changes the landscape for transfer taxes (i.e. gift and estate). Accelerating the scheduled reduction in the unified credit from $10 million to $5 million (indexed for inflation from 2010) is most noticeable. For those of us who are fond of round numbers, the 2022 unified credit is reduced from $12 million to $6 million more or less. The special use valuation adjustment for farms will be increased from $750,000 to $11,700,000 (the 2021 unified credit).
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I heard from Neil Carbone of Farrell Fritz PC. He told me that the estate planning community has been on pins and needles awaiting the final tax changes. The rate change was no surprise, but the limitations on further contributions to large retirement accounts ($10 million plus), which I have not discussed was.
He noted the common hurry up and wait attitude that some people take toward their estate plans.
After the 2020 election, many high net worth individuals engaged in significant estate planning of one type or another to use their existing lifetime exemptions. Others took a wait-and-see approach. Some wanted to do some planning but started the process so late that it became impossible to get it done by the end of the year because many estate planners, appraisers and trust companies became so overwhelmed that they just could not accommodate new work.
Now that they are upon us, these new tax changes will bring about a similar overflow of estate planning work. If the goal is to use up some or all of the increased exemption amounts while they exist, there is still time to do that as the change to the exemption amounts would not be effective until January 1, 2022. Anyone seeking to do that should act quickly, however, because it will become increasingly difficult to find the professionals available to do the work in time.
Read the full article on Forbes here:
