Estate planning attorneys saw a lot of 2020 year-end gifting. Many people are trying to plan for the possibility of some of the previous administration’s reforms being rolled back – especially the estate tax lifetime exemption (currently set at $11,000,000, adjusted for inflation) now that Biden has been elected president and Democrats control both the House and Senate.
President Biden is entering the White House during a historic and very difficult time. Many people have suffered great loss this year, especially as a result of the Covid-19 pandemic. The focus of his inauguration address was a call for unity and for getting the pandemic under control. At this point, tax reform does not seem to be one of President Biden’s first main goals.
Most legislation requires 60 votes in the Senate to pass, so Democrats would need both Republican support and to keep the support of moderates in their own party in order to pass tax reform. Although it is possible that tax reform could pass late in 2021 and be retroactive to January 1, most tax advisors don’t think this is likely. Instead, if tax reform does pass this year, many think it is more likely to happen toward the end of the year and be effective in 2022.