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Thanks to new IRS decree, clients can relax when making large gifts — for now

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Thanks to a late-year IRS decision, planners can now reassure clients that they won’t have to worry about making large gifts.

Questions had swirled after the new tax law increased the basic estate and gift tax exemption levels but had not made the changes permanent. Those changes had increased the exemption to $10 million per person from $5 million. With inflation adjustments, that exemption is now $11.8 million for 2018 and increasing to $11.4 million for 2019.

For a married couple, the exemption can be doubled to $22.8 million for 2019. This exemption can be used for lifetime gifting, but it was set to revert back to the pre-law levels after 2025.

That had left estate planners with the open question: What if my client makes large gifts now and uses up the current $11 million exemption, but then dies after 2025 when the exemption goes back to the lower levels? Will IRS claw back these gifts and tax them?
IRS has answered this lingering concern with newly issued proposed regulations. Making large gifts now won’t cause any harm to estates after 2025, the agency says.

Now you can reassure your clients that they won’t have to worry about making large gifts under the current larger exemptions levels.

So now it’s basically “use it or lose it” for taking advantage of the current exemption before it expires.

Contact your clients and let them know about this major estate planning development.

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