IRS Announces 2020 Estate and Gift Tax Exclusion Amount and Issues Proposed Regulations

The Internal Revenue Service (“IRS”) recently announced the 2020 Federal estate and gift tax exclusion amount.

In calendar year 2020, the exclusion amount for a single individual has increased to $11.58 million from the 2019 exclusion amount of $11.4 million. With proper planning or the use of portability, a married couple has a combined exclusion of $23.16 million. The Federal estate and gift tax rate will remain unchanged at 40%, and the annual exclusion amount, which allows taxpayers to make annual gifts of a present interest, remains at $15,000 per taxpayer per beneficiary.

Additionally, the IRS issued proposed regulations clarifying that taxpayers who take advantage of the current exclusion rates will not be adversely impacted when the higher exclusion amounts are scheduled to sunset in 2026. At that time, the exclusion is scheduled to revert back to $5 million, as indexed for inflation. In other words, the IRS has indicated there will be no “clawback” of exclusion.

The IRS proposed regulations make clear that individuals should consider taking advantage now of lifetime gifting strategies to lessen, or even eliminate, their future Federal estate tax liability.

Leech Tishman’s Estates & Trusts Practice Group is engaged in the development of practical, effective estate planning and business succession planning for individuals, families, businesses, non-profit organizations, and private foundations.

If you have any questions regarding estate & gift tax matters, please contact Melanie Cuddyre. Melanie is an Associate in the firm’s Estates & Trusts and Taxation Practice Groups and is based in the Pittsburgh office. She can be reached at 412.261.1600 or mcuddyre@leechtishman.com.

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Leech Tishman Fuscaldo & Lampl is a full-service law firm dedicated to assisting individuals, businesses, and institutions. Leech Tishman offers legal services in alternative dispute resolution, aviation & aerospace, bankruptcy & creditors’ rights, construction, corporate, employee benefits, employment, energy, environmental, estates & trusts, family law, government relations, immigration, insurance coverage & corporate risk mitigation, intellectual property, internal investigations, international legal matters, litigation, real estate, and taxation. Headquartered in Pittsburgh, PA, Leech Tishman also has offices in Chicago, Lakewood Ranch, FL, Los Angeles, New York and Wilmington, DE.