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But, now is the time to consider minimizing future estate tax liability.
Having a solid estate plan in place is an important step in preserving your wealth for generations. The looming change in the Federal Estate Tax Exemption makes the need for a thoughtful plan even more pressing.
When Congress passed the 2017 Tax Cuts and Jobs Act, they boosted the Federal Estate Tax Exemption, but only temporarily. Barring any changes from Congress, the estate tax exemption (which is currently $13,610,000 in 2024) is set to sunset at the end of 2025. Beginning in 2026, the federal estate tax exemption will be reduced to approximately $7,000,000 per person.
The exemption eliminates federal estate taxes on amounts up to the threshold of $13,610,000 (currently) either (1) gifted to family members during your lifetime or (2) bequeathed to someone upon your death. An easier way to think of the estate tax exemption is this: if a person dies in 2024 and has an estate valued at $13,610,100 and has not made any taxable gifts during lifetime, their estate will only owe tax on $100. If a person dies in 2026 and has an estate valued at $13,610,100 and has not made any taxable gifts during lifetime, their estate will owe tax on approximately $6,610,100.
Current exclusion levels provide a significant opportunity for planning. These plans can be fairly simple, but depending on the nature of assets and personal situations, there are a variety of more sophisticated techniques to assist with the preservation of wealth.
Developing an effective comprehensive plan includes:
- Gathering a team of professionals to assist in developing the right plan
- Engaging valuation services to determine the value of assets
- Implementing the plan
Avoid the high cost of rushed planning and take advantage of your team of professionals to assist you in the planning process. Gift and estate planning is not a “one size fits all” approach. Each plan should be customized to fit your needs.
LaPorte CPAs & Business Advisors is ready to assist you in this critical planning process, working with you to safeguard your legacy and help preserve your wealth for future generations. For more information, please email Tax Director Jennifer Bordes, CPA, at jbordes@laporte.com.
