Speculation surrounding the future of the federal estate tax is causing confusion for families and small business owners in the United States. The current federal estate tax exclusion is set to revert to pre-2017 levels at the end of 2025, but lawmakers may act sooner to establish a new direction.
Vince Lackner, President of The Lackner Group, emphasizes that while the future is uncertain, families shouldn't remain passive. The Lackner Group focuses on clarifying complex estate and fiduciary matters, especially during policy shifts.
One common misconception is that the federal estate tax impacts numerous small businesses and farms. In 2017, fewer than 100 such entities were subject to the tax. Many small farms and businesses qualify for installment payments, such as paying the tax over 15 years.
The demonization of the federal estate tax can lead to policies against people's own interests. The wealthy may spend unnecessarily on legal strategies or avoid planning altogether. Lackner's company provides estate and fiduciary software tools to help professionals and families navigate these complexities.
The per-person federal estate tax exclusion, which increased significantly due to the Tax Cuts and Jobs Act, is scheduled to decrease on January 1, 2026. Discussions suggest a possible compromise of keeping a higher exclusion amount permanently, potentially starting at $15 million in 2026.
Financial professionals are divided on whether clients should restructure their estates now or wait. Lackner notes that this uncertainty mirrors previous periods of change in estate tax policy. The Lackner Group aims to provide fact-based support during these times.
Currently, the federal estate tax affects a small percentage of estates. However, policy decisions regarding estate tax reflect broader societal values. Lackner advises individuals to prepare without panic or misinformation, regardless of what lawmakers decide.