My recommendation: be sober-minded about inheritance tax changes on the horizon.

Currently, only people who own more than $11.7 million in assets and life insurance (or $23.4 million for a married couple) need to worry about estate and gift taxation, commonly referred to as an inheritance tax. At current rates, there were only 1,900 people who died in 2020 to have any estate tax liability. That is only about 0.07 percent of people who will pay any estate tax at current rates. 

However, President Biden has proposed reducing that to $3.5 million per person (or $7 million for a couple).

I, personally, do not anticipate the unified credit falling back to $3.5 million. The Obama/Biden administration set a $5 million estate tax exemption (or $10 million for couples and indexed for inflation after 2011) with a top rate of 35 percent. I think Biden will settle somewhere between $5 million and $7.5 million with perhaps a higher rate around 40 percent. If the exemption falls to $5 million again, then around 4,000-5,000 families will be required to pay some estate tax.

Practice pointer: If you own more than $3.5 million dollars (or $7 million as a couple), you need to see an estate planning attorney. You may need to make some transfers and planning moves today to take advantage of the current rates. YOU CAN LOCK IN TODAY’S RULES.

UPDATE 4/14/2021: Senate Bills Propose Changes to Estate Tax