Planning Ahead: Sun Setting Gift Tax Implications

Isn’t it surprising how fast the sun sets?  How a good thing can quickly disappear? 

It is important to note that changes are on the horizon.  The current estate and gift tax exemption law is scheduled to sunset at the end of 2025. After that, the exemption amount will revert to the prior law of 2010.  

For 2024, the lifetime gift and estate tax exemptions are $13,610,000 per person ($27,220,000 for married couples) and the annual gift tax exclusion is $18,000.  If the law sunsets, the amounts will revert to $5,000,000 (adjusted for inflation). 
 
Why should you have a sense of urgency when we are talking about the end of next year?

As an article in Kiplinger’s emphasizes, wealth planning using sophisticated techniques takes time to consider any hurdles and challenges that might come up along the way. The current exemption is the highest it has ever been. If you are considering making substantial gifts in the future, it is wise to act before the sunset to take advantage of the higher exemption while it lasts!  Otherwise, many individuals and families who are currently exempt from this tax may find themselves in a completely different situation with significant tax liabilities.  

Now is the time to explore your options including a spousal lifetime access trust (SLAT), irrevocable trusts for children/descendants, or gifting away assets, to name a few. 

Do not let the sun go down without a plan in place.  To do this, seek the guidance you need, start your gift and estate planning earlier rather than later so that you and your advisory team have the time necessary to prepare, and be sure to build flexibility into your plan.  If there is one thing we know for sure, the exemption landscape is ever-changing.  
 
With our decades of experience and guidance, we are here to help answer your questions and empower your decisions.  

Empowering generations,

Karin Egan, ALMI, ACS

Karin

P.S. For additional insights check out these reputable resources:

• Why You Should Plan Now For A Big Tax Event In 2025 (forbes.com)
• How to Prepare for Upcoming Estate Tax Law Changes (msn.com)