2022 Estate Planning Numbers Update

Tom Vercauteren | 01.21.22

Many prognosticators forecasted significant tax law changes for 2021 that could have had tremendous impact on clients’ estate plans. However, despite a proposal from the House Ways & Means Committee to lower the estate tax exemption and include grantor trusts in an individual’s estate, Congress did not implement any significant change.

2022 Exemption Adjustments

• Lifetime gifting and GST Exemption = $12,060,000 (up from $11.7 million)
• Annual gifting exclusion = $16,000 (up from $15,000)

The window to make any substantial changes to these figures appears to be closing, as the 2022 midterm elections may affect the ability of Congress to implement changes to the estate tax. If Congress does not act prior, the lifetime and GST exemptions are scheduled to revert back to $5 million on January 1, 2026, although that figure will be indexed for inflation from 2011.

Additionally, the annual exclusion from gift taxes increased for the first time since 2018. Individuals can now gift up to $16,000 per year ($32,000 for a married couple splitting gifts) to any one individual without necessitating a gift tax return.

Unchanged Estate Planning Techniques

• Stepped up basis is still available for inherited assets that are included in a decedent’s estate
• Grantor trusts can still be structured to remove such assets from individual’s estate
• Deceased Spouse’s Unused Exemption (DSUE) is still fully portable to a surviving spouse

Stepped up cost basis, portability, and the use of grantor trusts to shift assets out of taxable estates remain at present. These three points appeared in the crosshairs of several 2021 tax policy proposals, but absent prompt Congressional action, remain valuable tools towards achieving estate tax minimization.

Social Security

• Social Security Cost-of-Living Adjustment increase = 5.9%

Inflation appears to be the primary driver behind a record increase of the highest annual increase of Social Security and Supplemental Security Income (SSI) from a cost of living adjustment. This adjustment should be seen immediately with January’s SSI checks.

In light of the updated figures, there are estate planning opportunities for individuals and couples to achieve their goals in 2022. Our Estate Planning Practice Group is ready and available to help you meet these goals, whether tax motivated or otherwise.

• Tax