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NEWS FLASH: “Clawback” is no longer a concern in making large gifts!

death to clawback

On November 22, 2019, the IRS announced in IR-2019-189 that final Treasury Regulations will allow individuals to take advantage of the increased gift and estate tax exemption amounts which are in effect now through 2025, even if a person dies after such amounts drop back to pre-2018 levels.

In other words, the IRS has confirmed that a person who makes a large gift or bequest prior to 2026, using up to $11.4 million (per person) in transfer tax exemption, will not have the excess amounts “clawed back” on their estate tax return, even if they die after exemptions drop lower than the current amount, as they are scheduled to do in 2026 (currently scheduled to drop to $5 million, indexed for inflation).

This is great news for anyone wanting to make tax exempt gifts of up to $11.4 million per donor, or $22.8 million per married couple!

Important Note: Even though this heightened exemption amount is on the books to run through 2025, nothing would prohibit the early rollback of the law, should the political landscape in the executive and legislative branches change.

As such, 2019-2020 might provide a very extraordinary dispensation in gift giving unlike anything we’ve ever seen before.

Please contact our office to schedule an appointment with one of our estate planning attorneys who can advise you further on this special opportunity.