Although the widespread rollout of COVID-19 vaccines is allowing us to “see the light at the end of the tunnel,” we are still feeling the effects of the pandemic in many ways. Certain of these effects have created especially advantageous opportunities for wealth transfer planning; specifically, opportunities arising from depressed asset values and low interest rates, coupled with the current high federal exemptions for gift, estate and generation skipping transfer taxation.

The current federal transfer tax exemptions are each $11,700,000 per donor or decedent (indexed annually with inflation). These exemptions are exceptionally high by historical standards. Under current law, these exemptions are scheduled to decrease by approximately 50% at the beginning of 2026. However, President Biden, with support of Congress, may look to enact legislation to decrease the exemptions sooner and to even lower amounts.