Estate PlanningPreparing for the Federal Estate and Gift Tax Exemption Sunset

Preparing for the Federal Estate and Gift Tax Exemption Sunset

May 17, 2024 (1mo ago)

While the federal estate tax, gift tax, and generation skipping transfer tax exemptions are currently at an all-time high of $13,610,000 as a result of the the Tax Cut and Jobs Act (the “TCJA”) enacted by the Trump Administration in 2017, those exemption amounts are scheduled to “sunset” on December 31, 2025 and revert back to the pre-2018 level of $5,000,000 (indexed for inflation).

In light of the looming change in the federal estate tax, gift tax, and generation skipping transfer tax exemptions, we want to draw our clients' attention to some potential strategies and considerations for future estate and tax planning, which would allow you to transfer assets and wealth to future generations, reduce your taxable estate, and create significant tax savings for your heirs.

Maximizing the use of the current federal estate tax, gift tax, and generation skipping transfer tax exemptions would involve various estate planning strategies that would be specifically tailored to your specific circumstance. Certain strategies may include, but not be limited to, the following:

Gifts and Trusts

Structuring gifts and establishing irrevocable trusts to transfer certain assets to beneficiaries while staying within the current exemption limits.

Business Succession Planning

Utilizing exemption limits for transferring ownership or shares within a family-owned business.

Irrevocable Life Insurance Trusts

Establishing irrevocable life insurance trusts to remove life insurance proceeds from your taxable estate.

Annual Gifting Campaigns

Taking advantage of annual gift exclusions (currently $18,000 per person) to transfer assets without impacting your estate and gift lifetime exemptions.

In light of all of this, we recommend that clients schedule a meeting with our estate planning team to not only discuss your estate planning goals and prospective estate planning updates based on changes in circumstance and/or changes in the law, but also potential ways to leverage the current estate tax, gift tax, and generation skipping transfer tax exemptions that are set to sunset December 31, 2025. Your estate planning goals should align with your financial and familial goals, such as securing your legacy, optimal tax efficiency, and maximum transfer of wealth to future generations.

Please do not hesitate to reach out to our office (630.920.0406 or info@donatellicoules.com) if you would like to schedule a meeting to discuss your goals and potential implementation of certain estate planning strategies.

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