With the introduction of the “For the 99.5% Act” proposed by Senator Bernie Sanders, there is an increased likelihood for sweeping federal estate and gift tax reforms occurring during the latter part of 2021. The proposed changes, if enacted, would dramatically impact estate planning by significantly reducing the current federal estate tax and gift tax exemptions.

The current federal estate and gift tax exemption amounts in 2021 are $11.7 million per person and $23.4 million per married couple when passing assets down to the next generation. This means an individual can avail himself or herself of this $11.7 million exemption to (1) gift away up to $11.7 million during his or her life without triggering a gift tax, or (2) transfer up to $11.7 million upon his or her demise to his or her heirs free from the federal estate tax, or (3) split the $11.7 million exemption between gifts during his or her life and his or her heirs at death.