Planning Around the Exemption Amount and Sunset

Exemption Amount and Sunset

Taxpayers with significant estates were no doubt happy when the estate tax limit was raised to $11,580,000 million from $5,490,000 million in 2017. This means that a wealthy individual can now gift or bequeath up to $11,580,000 million in assets without being subject to the onerous gift and estate tax regime (death tax regime). For a married couple, this amount is double since each person has their own exemption amount.

What many people may not realize is that this new, larger exemption limit is set to expire after 2025. Unless Congress extends the higher limit, it is guaranteed to revert to the $5 million dollars, fixed for inflation, limit. Given the uncertainty surrounding this situation it may feel overwhelming to plan for the future. Individuals with estates that are between $5 million and $11 million may be wondering how to handle this uncertainty.

At THEVOZ Attorneys, PLLC, we believe that this is the perfect opportunity for you to review your estate plan in order to maximize the current exemption amount. With years of experience with dealing with high net-worth individuals, we can help create a “profile” of all your major assets. We can then walk through the potential gift and estate tax liabilities that your assets may be subject to on your passing.

  • The IRS will be quick to total up the value of all of your assets. It is advisable to have a plan before the IRS gets its chance. In addition, there are certain planning techniques that can be used to minimize the value of your estate.
  • Estate planning is not just about dollars and cents. We know that you need trusted advisors that will not only help you plan for the inevitable but that will be there with your beneficiaries and heir’s apparent. Estate planning services are vital to ensure that your wishes are carried out, and that your beneficiaries are provided for, no matter the situation.
  • For smaller estates we discuss creating a gifting schedule that effectively takes advantage of the annual exclusion. Currently that exclusion amount is $15,000.
  • We can also help rework or unwind estate plans that have become obsolete or may be undesirable.
  • If you are receiving a gift from a foreign person or foreign trust there are special rules that you need to be aware of, click here to learn more about IRS Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.

Planning for the future is still possible in the climate of uncertainty created by the question of whether the increase in the estate tax limit will persist after the new exemption amount sunsets in 2025. It is important to start planning as soon as possible to ensure you have enough time to respond and implement the different options available to you.

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