Wealthy families got an early Christmas gift from the Trump administration this week, as the U.S. Treasury Department issued a proposed rule that would encourage large, tax-free gifts to heirs.
The proposal would clarify the GOP tax bill’s significant reduction of taxes on inheritances and gifts, which is scheduled to expire at the end of 2025. Some tax advisers were concerned that recipients of large financial gifts could be hit with big tax bills if the giver died after the 2025 expiration, but the proposed rule states that there will be no clawback of taxes on gifts given before that date.
“Treasury has just confirmed that the increased estate and gift tax exemption is ‘a use it or lose it proposition,’” estate lawyer Larry Heller told Forbes. And The Wall Street Journal’s Richard Rubin said, “Once the regulation becomes final, it is likely to spur a wave of wealth transfers from people worth more than $5 million to their children.”