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Limited Window for Planning Opportunities

As of January 1, 2024, the federal estate, gift and generation-skipping transfer (GST) tax exemptions stand at $13.61 million per individual and $27.22 million per married couple. These exemptions represent the amount that an individual (or married couple) can transfer during their lifetime or at death without incurring gift, estate and/or GST tax. Transfers exceeding these exemption amounts are subject to federal taxes at a rate of up to 40%. Notably, unless new legislation is enacted, these exemption amounts will expire at the end of next year, decreasing to approximately $7 million per person and $14 million per couple.

Limited Window for Planning Opportunities

We are currently experiencing the highest exemption levels in history, presenting families with a rare and strategic estate planning opportunity. Failure to utilize these exemptions before the end of 2025 means missing out on a potentially once-in-a-generation tax planning advantage. This is particularly critical for families whose estates may grow beyond the reduced 2026 thresholds of $7 million per person and $14 million per couple.

Families should consider taking advantage of the current exemptions by:

1. Making strategic gifts to children, grandchildren and/or charities through trusts to obtain estate tax and asset protection planning benefits, well before the end of next year.

2. Forgiving existing intrafamily loans.

3. Allocating their GST exemption to prior transfers where GST exemption was not previously allocated.

It should be noted that lifetime gifting is always more tax-effective than transferring assets at death due to the favorable calculation of gift taxes (as opposed to estate taxes) and because all income and appreciation on assets post-gift escape gift, estate and GST tax.

Additionally, existing Wills and revocable trusts should be revisited. Many estate plans include trusts, such as credit shelter trusts, which are funded based on the exemptions in effect at the time of death. Given the impending fluctuation in exemptions, the actual funding of these trusts could deviate significantly from a grantor’s original intentions, potentially resulting in unnecessary estate tax exposure.

Act Now

Developing a bespoke estate plan that achieves tax savings while fulfilling family objectives requires time and expert advice. It is crucial to review and implement these plans well before the 2026 deadline. Please contact us at to discuss creating or updating your estate plan.


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