Change in control of the presidency is causing concern for many high net worth taxpayers. Many assumed that the $10,580,000 estate tax exemption, discount planning, and other techniques were permanent (notwithstanding the law that provides the exemption to be reduced by half on January 1, 2026). While very unlikely, it is possible that the exemption could be reduced as early as January 1, 2021, if such a law is passed during the calendar year 2021. Fortunately, there are ways to gift large amounts without needing to transfer specific current assets. Instead, assets can be sold to an irrevocable trust in exchange for a note that may be gifted or forgiven.

Learning Objectives:

• Identify the essential components of the Biden 2-Step planning protocol, including the most efficient way to transfer assets to a trust in exchange for a note and how to reduce, transfer, or contribute the note to use significantly more than half of a taxpayer’s estate tax exemption


• List special considerations concerning the timing of a sale


• Identify what needs to be disclosed on a gift tax return


• Identify the value of a long-term note issued at the applicable federal rate


• Recognize how to use a lifetime QTIP Trust to make a transfer in 2020 and then decide later whether to consider the transfer complete, unwind the transfer, or make it incomplete in the second half of 2021