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Don’t Wait to Be Connected to High Estate and Transfer Tax Exemptions

Harry October 31, 2024

Don’t let an unknown tax future catch you off guard. That’s my message to Americans ahead of a tax change that will affect millions of us.

When it comes into force in 2017 Tax Cuts and Jobs Act (TCJA) was the most comprehensive overhaul of the U.S. tax code in decades. And if some provisions are allowed to expire in 2025 as planned, nearly every American will be affected if they don’t act now.

The 2024 presidential election is just days away, and with it will come many tax-related changes that will likely affect millions of Americans. If you haven’t done your review financial plan lately and especially estate planI cannot emphasize enough the urgency of taking advantage of these historically high exemptions Now, Today. Not after the election. Now. This is a unique opportunity to maximize the legacy you leave to your loved ones.

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tax planning It is a long and complicated process and waiting is not a wise option. Whoever your advisor is, contact them today and take a step forward to help you navigate significant complexities.

There will always be uncertainty about the future of taxes. But in this case, you have the opportunity to act now and reap the benefits in the long run.

Let’s simplify what’s at stake for Americans

Typically, the federal government imposes a transfer tax of up to 40% on certain wealth transfers. property tax valid on death or gift tax in lifetime transfers. If you make these transfers to a grandchild or subsequent grandchild, an additional generation-skipping transfer tax of potentially up to 40% may apply. There may also be estate or inheritance taxes at the state level, depending on where you live. However, under the TCJA, individuals are currently allowed to transfer significant assets from their estate without having to make any payments. any federal transfer taxes.

The TCJA provides a lifetime estate and gift tax exemption for individuals of $13.61 million in 2024 ($13.99 million in 2025); This means you can donate up to this amount; Any donations above this amount will be subject to up to 40% tax. .

This exemption is historically high but also potentially time-limited. The increased exemption is scheduled to be “updated” after 2025 and drop to approximately $7 million on January 1, 2026.

The only way to take full advantage of the increased exemption is to make significant lifetime gifts before the expiration date.

Notably, these gifts are not taxable retroactively unless the TCJA provisions are renewed.

Maximizing the upside of this opportunity often requires an “all of the above” approach that includes trust planning, lifetime gifts, and the use of gifts. life insurance. Having a comprehensive, flexible and holistic plan that includes life insurance can help you maximize the amount of assets your heirs will receive.

In other words, the best way to take advantage of the opportunity in front of us is to financial professional Who can see the full picture of your financial and tax situation? Your advisor can then assemble the right team and create a plan that will allow you to take advantage of the exemption immediately. preserve wealth for future generations.

Consider taking action now

Don’t delay this any further. The clock is ticking. Considering everything that goes into estate planning of this magnitude, the time to act will expire faster than you think. For some people, delivery time may take anywhere from six months to a year.

Figuring out how much of your wealth you can transfer, to whom, or in what form is not a quick process (e.g., should your children receive cash or part of the family business? How much? Should they receive it outright or in an upfront trust?). And even after big decisions have been made, analyzing and preparing documents by lawyers, accountants and other consultants is not always a quick effort.

You also need to consider the unprecedented demand and competition for qualified professionals (lawyers, accountants, etc.) and how this will affect your timeline for implementing and implementing a plan.

The future of tax law will always be in flux. Trying to predict these changes can be difficult, if not impossible. Instead, investors business owners and with people inherited wealth It should prioritize flexibility to protect against future uncertainty.

If higher deductibles are extended, you will reach the benefits in advance. Contact a qualified financial planner now to guide you through the process and create a long-term plan that meets your needs.

This article was written by and represents the views of our contributing consultant and not by Kiplinger’s editorial staff. You can check consultant records at: SEC or with FINRA.

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Pasteleria-edelweiss

Don’t Wait to Be Connected to High Estate and Transfer Tax Exemptions

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