In my last post, I alerted you to the fact that the federal gift and estate tax exemptions— now at a record high of $11.58 million per individual for 2020--would revert back to $5 million per individual (adjusted for inflation) in 2026 and could be cut back much sooner and more dramatically depending upon the results of this year’s election. I urged you not to postpone making lifetime gifts to use up the increased amount. As a follow-up, I thought I should lay out some of the pros and cons of making lifetime gifts.
Pros: Advantages of Lifetime Gifts
One advantage of lifetime gifts is that a regular program of lifetime gifting can substantially reduce your estate tax bill. A current gift of property likely to increase in value during your lifetime not only removes the property from your estate but also removes all post-gift appreciation. If the gift is within your available Federal gift tax exemption— you will have passed all of this value to your children transfer tax free.