The 2017 Tax Cuts and Jobs Act (TCJA) doubled the lifetime estate and gift tax exemptions, increasing them to $11.18 million for individuals and $22.36 million for couples, with continued increases after 2018. Currently, the exemptions stand at $12.92 million per person and $25.84 million for a married couple. The increased exemptions in the TCJA are scheduled to end December 31, 2025, at which time the exemptions will drop to approximately $7 million per individual and $14 million for a married couple, subject to inflation.
Congress could implement new tax legislation to change the upcoming “sunset” of the TCJA lifetime estate and gift tax amounts, but reviewing your estate plan now will provide you time to consider your options. You can proactively address your situation by scheduling conversations with your attorney, CPA, and financial planner to determine if your estate plan should be immediately altered rather than possibly losing the opportunity prior to the law change. One simple strategy is to make use of the current annual gift tax exclusion, which is $17,000 per individual donee in 2023 and $18,000 per individual donee in 2024.
If you are thinking that the reduction in the lifetime estate and gift tax exemption amount will not affect you, consider whether your estate is growing and at what rate. Furthermore, it is always a good strategy to revisit your plan every few years to ensure it reflects your current wishes that may be affected by major life events, changes in the named trustees/fiduciaries, or variations in the types of assets in your estate.
Contact us today at 248.477.6300 to make sure your plan still works for you.