It’s widely expected that Congress will be changing the estate tax in this session. A bill hasn’t been introduced yet so we don’t know how the estate tax will be changed. However, there are two scenarios that appear to be the most likely.
The first is that the estate tax exemption will be reduced from $11.7 MM per spouse to $5 MM per spouse. This $5 MM exemption is what was in place when President Obama was in office. It’s important to remember that this exemption amount was a result of negotiations with Republicans. The composition of Congress has changed so they can now pass tax changes with just Democratic support. The second scenario (and perhaps more likely) is that the exemption will be reduced to $3.5 MM per spouse. This is what former President Obama campaigned on and what Biden has promoted as well.
With this being the case, these are some ways to plan for an expected change in the estate tax: