California residents who have worked hard to build wealth may want to leave behind an estate designed to minimize federal tax liability. CNBC explains how strategic planning can help a taxpayer capitalize on current federal tax exemption limits for estates and gifts.

The 2017 tax reform law doubled the $5 million federal estate and gift tax exemption. Adjusted for inflation, an individual may claim an exemption of up to $11.58 million in 2020. This means that a taxpayer may use up to a total of $11.58 million to offset gift taxes during his or her lifetime and estate taxes upon his or her death. The law currently schedules this higher exemption to be in effect through 2025 and may then go back down to $5 million.

However, political and economic pressures may cause lawmakers to repeal or reduce this exemption before 2025. The Internal Revenue Service has indicated that it will recognize tax benefits realized under existing limits even if policymakers act to reduce or eliminate the exemption in the future. For this reason, experts suggest that taxpayers may find it advantageous to create a plan that makes the most of this current threshold while it is in effect. Planning may involve gift-giving within federal limits or the transfer of assets in a way that reduces the value of an individual’s estate at death. For small-business owners, planning may also weigh succession considerations against tax savings.

Careful estate planning can help taxpayers take advantage of exemptions that minimize federal gift and estate taxes. Because tax laws and regulations are subject to change, many individuals find it useful to consult with an attorney experienced in estate planning.