Pub. 2 2020 Issue 5

S E P T E M B E R / O C T O B E R 2 0 2 0 10 nebraska cpas C O U N S E L O R ’ S C O R N E R PREPARING FOR POTENTIAL ESTATE & GIFT TAX LAW CHANGES BY NATHAN PATTERSON & ALEX WOLF, KOLEY JESSEN With the 2020 election right around the corner, the United States may be on the precipice of another major tax regime overhaul. Just as quickly as President Trump’s 2017 Tax Cuts and Jobs Act (TCJA) brought the estate and gift tax exemption to its all-time high, the election of Joe Biden and a swing to a Democrat-controlled Senate could push the exemption back to pre-2017 levels, or perhaps even lower. As discussed in more detail below, tax and financial advisers serving high-net-worth individuals should take this time to examine the desirability for some of their clients to utilize their remaining exemption during the 2020 tax year. Moreover, with the potential that any tax law changes passed next year could have a retroactive effective date of January 1, 2021, it is important that these discussions take place as soon as possible. Put simply, high- net-worth clients who wish to “lock in” the use of their exemption should be prepared to do so by December 31, 2020, or they could potentially lose out on millions of dollars of estate and gift tax savings. By way of background, the estate and gift tax systems work hand in hand to tax the value of all assets that may be transferred from an individual during life and at death in excess of the exemption. As of January 1, 2020, the exemption allows each individual to pass up to $11.58 million tax free to their desired beneficiaries, either at the time of death or through lifetime gifts. To the extent lifetime gifts and gross estate value on a