You Might Have an Estate Tax Issue Soon

In 2017, the Tax Cuts and Jobs Act (TCJA) substantially raised the federal estate tax exemption to $10 million. This designated sum allows you to gift assets to your loved ones, free from gift or estate tax obligations upon your passing. Any portion of this exemption utilized during your lifetime diminishes the available amount at death for estate tax purposes. However, the year 2026 may lead to significant shifts impacting estate taxes. A countdown looms towards a potential expiration of this generous exemption by the end of 2025. Projections by the Congressional Budget Office suggest a reduced exemption of $6.4 million in 2026. Compelling arguments exist both in favor of and against these legislative alterations. Insights from professional advisors are invaluable in preparing for either outcome so that you do not have an estate tax issue.

How Concerned Should You Be about Estate Tax Issues? 

For those with considerable wealth, upcoming estate tax obligations might necessitate prompt action before the tax exemption diminishes in 2026. Preparation is essential. Therefore, proactively crafting and executing effective estate planning and tax strategies is necessary.

As we enter 2024, it’s pivotal to reassess estate planning objectives and strategies, considering the potential impacts of changes in the federal estate tax exemption law. Since the Tax Cuts and Jobs Act (TCJA) may roll back the estate tax exemption, vigilance regarding the valuation of your asset portfolio becomes imperative. A comprehensive reevaluation of your primary investments and properties is essential for ensuring their safeguarding. Certain assets, such as business interests, life insurance, and real estate, may have steadily appreciated, posing potential challenges regarding estate tax implications. Individually, they might not exceed estate tax thresholds. However, collectively, they could pose a considerable concern for individuals with substantial wealth.

In January’s newsletter, you’ll learn all about the possible reduction of the federal estate tax exemption and how this could lead to significant shifts that impact your estate taxes. Check out this month’s newsletter for more information, and schedule your free consultation today to avoid an estate tax issue.