Do I Need To Make A Large Gift Now?

Many wealthy individuals are asking that question out of fear that the historically high estate/gift tax exemption of $11,580,000 ($23,160,000 for a married couple), indexed annually for inflation, could be significantly decreased prior to its scheduled "sun-setting" on December 31, 2025 to $5,490,000 (indexed for inflation) if the Democratic party sweeps Congress and the White House in November. There is no single correct answer or analysis as every individual and family situation is different. But here are some general observations: (i) a gift of an asset during lifetime forgoes the opportunity to get a "stepped up" tax basis for income tax purposes if the taxpayer owned the asset at death; (ii) BUT, currently, the estate tax rate (40%) is much higher than capital gain rates, and repeal (or significant limitation) of the "stepped up" basis rule itself is also part of Biden's tax proposals; (iii) if the individual is single with a taxable estate in excess of