The Tax Cuts and Jobs Act increased the estate and gift tax exemption to $10 million per person, adjusted for inflation. Under this regime, the exemption available to each American in 2019 is $11.4 million. The increased exemption amounts are scheduled to sunset at the end of 2025, which theoretically gives wealthy families and their advisors plenty of time to take advantage of this planning opportunity.

As the presidential campaign heats up, high profile Democrats are providing clues regarding what they might do if elected in 2020. For example, Bernie Sanders and Elizabeth Warren have each unveiled tax plans that focus on taxing very wealthy Americans.

Bernie Sanders’ proposal would reduce the estate tax exemption to $3.5 million and the gift tax exemption to $1 million, which are the same amounts that were available in 2009. Sanders’ plan would also apply a top estate tax rate of 77% for estates valued in excess of $1 billion. An estate valued at between $3.5 and $10 million would be taxed at 45% rather than the current 40%.

Elizabeth Warren would impose an annual “wealth tax” on families with assets exceeding $50 million in value. Although this proposal is not directly connected to the estate tax, it reflects a philosophical approach that is consistent with Sanders’ plan.

Planners who work with high net worth families should take note. Now is the time to discuss the planning opportunities afforded by the current high gift tax exemptions. None of us can predict the outcome of the 2020 election, or the tax legislation that might follow. However, waiting until the fall of 2020 to consider planning options could simply be too late.