You should take action on your estate plan before the end of 2020.

It is now November.

No, really.

We are fewer than two months away from the start of a new year.

2021.

Yikes!

This year has brought many challenges <understatement> and has underscored the importance of estate planning.

Although we cannot predict what 2021 will hold, we can prepare for what is within our control.

According to a recent The National Law Review article titled “Top Ten Estate Planning Recommendations before the End of 2020,” you should think carefully about your estate plan before the end of 2020.

Some individuals may need to adjust their estate plans before the end of 2020.

What could you consider?

You will need to think about the estate, gift, and generational-skipping transfer tax exemption.

Although the "basic exemption amount" is currently $11.58 million per individual, it is expected to increase to match inflation each year through 2025.

For example, a week ago today the IRS announced that the basic exemption amount will increase to $11.7 million for 2021.

Warning: in 2026, the basic exemption amount is set to revert to $5 million, absent a "super majority" of Senators to make the Trump tax laws permanent.

Although this is the plan, you can never truly predict the political workings of those in government <understatement>.

But taxation is the continuation of politics by other means. (A tip of the hat to Carl von Clausewitz there.)

Depending on what happens as America weighs in on its leaders at the federal level tomorrow, that could all change.

And drastically.

Double yikes!

Estate planning tools and strategies like GRATS, Grantor Trusts, and Discounts may be phased out or eliminated outright, along with the step up in basis on appreciated assets at death.

If it looks like this exemption will be disappearing early or these tools will be powerless, you will want to act accordingly.

Are you married?

If yes, you could consider creating and funding a Spousal Lifetime Access Trust, also known as a SLAT.

With a SLAT, you can gift your basic exemption amount to an irrevocable trust and still be able to indirectly benefit from the assets.

Are you single?

Consider gifting your basic exemption amount to an irrevocable trust created through "domestic asset protection trust" legislation and remain a beneficiary of this trust.

Other estate planning options to consider before the end of 2020 are GRATS, GLATS, or intra-family loans.

Because interest rates are low, this is an ideal time to use these tools.

Do you currently live in a high tax state?

If yes, consider moving to a low-income tax or no-income tax state.

Think Florida.

A new year and new election can bring many changes.

Take the time before the end of 2020 to review how changes in life circumstances and the political/tax winds could change your estate planning goals, then adjust your plans accordingly.

Flexibility is the watchword, friends.

Reference: The National Law Review (Oct. 6, 2020) “Top Ten Estate Planning Recommendations before the End of 2020”