Estate Planning 2021 and Beyond - Estate Taxes

The combined estate and gift tax exemption for the year 2021 is an astronomical $11,700,000 for individuals. Clair Law wants to make you aware that this combined tax exemption is scheduled to bounce back on January 1, 2026 to the sum of $5 million per individual (with future inflation adjustments). Everything that you own in your name is included in your estate for estate tax. It can include investment accounts, annuities, and life insurance proceeds - in addition to real estate and bank accounts. Additionally, property that you exercise substantial control over will also be included. This is an important issue that requires consulting a professional. An estate valued at $10,000 more than the 2021 federal estate tax exemption is taxed at a rate of 18%, while an estate that exceeds the exemption amount by $1 million or more is taxed at 40%. You should further be aware that the new administration, and U.S. Congress may put forth legislation that would greatly reduce the combined estate and gift tax exemptions. Wisconsin’s estate tax “sunset” and was eliminated for deaths occurring after December 31, 2012 but could be reinstated at some time in the future. Our clients are advised to stay alert to all tax changes on the federal and state levels. Clair Law clients are also encouraged to review all estate plans between now and January 1, 2026. We suggest that you do not wait to the last moment (2025) to contact us for an office appointment and to make sure that your existing estate plan gets the best estate and gift tax exemptions available.