As we are more than halfway through 2024, now is the time to start thinking about planning for the remainder of the year as well as potential planning opportunities for next year.
You may or may not already be aware that the Tax Cuts and Jobs Act (TCJA) went into effect on January 1, 2018 and doubled the estate and gift tax exemption amount from $5 million to $10 million for individuals and $10 million to $20 million for joint filers. This exemption amount has been indexed for inflation, so by this year (2024) it has risen to $13.61 million per person and $27.22 million per married couple.
The lifetime exemption amounts for estate and gift taxes are the same, which is why they are discussed together. It is important to note that in addition to the estate and gift tax exemption amounts, you may make annual gifts up to $18,000 (per recipient) in 2024 without utilizing any of your gift tax exemption. You are also able to pay tuition and medical expenses for others and have them not be treated as gifts so long as the amounts are paid directly to the educational institution or medical provider.
Since the TCJA sunsets on December 31, 2025, the estate and gift tax exemption at the onset of 2026 will be reduced by half if Congress does not take any action to extend the provisions. With that said, now is the time (if you have not already done so) to consider gifting and estate planning options above and beyond the annual exclusion amounts of $18,000 per person.
SAX’s Trust and Estates team is ready to discuss potential opportunities and strategies to plan to preserve your wealth and shelter assets from estate and gift tax. For questions or to set up a call, please contact Lisa Mela at lmela@saxllp.com.