Proposed regulations issued by the IRS on November 23rd of this year cleared up one of the main concerns to gift givers after the Trump Tax cuts of 2017. The doubled estate tax and gift tax exemption will face no claw-back when these rules expire at the end of 2025. This proposed regulation eliminates some of the unease that individuals may felt at the possibility of later having to pay taxes on past giving. This is of significant importance due to the huge jump in the estate tax exemption for $5.49 Million in 2017 to $11.18 in 2018, which could have created massive back payments.
This ruling also applies to the generation skipping transfer exemption as well as the estate tax exemption. While estate planning attorneys may have had language advising of the possibility of a claw-back, this regulation eliminates any doubt that gifting your full current exemption will cause a headache in 2026. If you are interested in learning more about the new proposed regulations, please feel free to reach out to the experienced attorneys of Morris Law Group.