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Fancy Dinner

Estate Planning for High Net Worth Women

The United States lifetime estate, gift and generation-skipping transfer tax exemption amounts available to U.S. citizens, as of January 1, 2024, is $13.61 million per person ($27.22 million per married couple).  Notably, this increased exemption amount is a "use it or lose it" opportunity, given that it is scheduled to sunset after 2025, when the exemption will revert back to $5 million and will be indexed for inflation.  Given the change in administration, this federal exemption could be changed much earlier than current law mandates.


Women of means deciding whether to gift assets to loved ones to take advantage of the temporary increase in the exemption amount should consider the level of their wealth (including future earnings, income and appreciation), asset protection planning, the need for future access to gifted assets, and the income tax consequences of transfer.  Moreover, individuals need to be aware of the relatively low interest rates still in effect and the concomitant effect on powerful gifting techniques.  These benefits become less rewarding as interest rates increase.  For residents of states with a state estate tax (such as New York, Maryland, Massachusetts, New Jersey and Washington), gifting during life using the exemption amount may enable those funds to escape a state estate tax that could otherwise have been imposed at death.

In addition, each U.S. person may give annually, to as many recipients as they desire, without the imposition of gift tax or the use of the individual's lifetime federal exemption, an amount equal to $18,000 per recipient.  Wealthy individuals should consider making gifts to children and grandchildren (either outright or in trust) using their annual exclusion amounts in order to deplete the value of their estates over time, without using any of the federal exemption amount.

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