It is crucial to act now and schedule a meeting to discuss the potential changes to estate taxes if your assets exceed $3.5 million, as these developments could significantly impact many of my clients, and appointments will fill up quickly. By addressing these changes proactively, you can ensure that your estate plan is prepared and that your legacy remains intact. Don’t wait—let’s work together to navigate these important decisions and secure your financial future.

As we move through 2024, it is a great time to think about your future and your family’s financial well-being—especially when it comes to estate planning. One big issue on the table is the potential reduction of the federal estate tax exemption. With ongoing discussions about tax reforms, now is the moment to review your estate plan and understand what these changes might mean for you.

What Is the Estate Tax Exemption?

The estate tax exemption is the amount of money you can pass on to your heirs without having to pay federal estate taxes. Currently, the exemption is quite high—$12.92 million per person and $25.84 million for married couples. However, there’s a possibility this could decrease, possibly dropping to around $3.5 or $7 million per individual in the near future, depending on which political party ends up in power. Any amount over that amount will be taxed at a minimum rate of 50%.

Your Estate May Be Larger Than You Think

For estate tax purposes, your estate includes all assets you own at the time of your passing, such as real estate, cash, investments, personal property, retirement accounts, life insurance proceeds, and business interests. Understanding what comprises your estate is essential for effective planning, as the total value determines potential tax liabilities that could impact what your heirs ultimately receive. 

Why You Should Act Now

  1. Any Changes Made May Be Made Effective Immediately

We might not have any notice before these changes become effective. The last bill proposed reducing the exemption amount was made to be effective retroactively to the date it was proposed. 

  1. Be Prepared for Changes
    Estate Tax laws are notoriously subject to change, and the potential for a reduction in the estate tax exemption looms large. Tax laws can change quickly, and the possibility of a lower exemption is real. By taking action now, you can avoid scrambling to adapt later. This way, you can help protect your loved ones from unexpected tax bills that could cut into their inheritance.
  2. Make the Most of Your Wealth Transfer
    If the exemption decreases, any assets over the new limit could be taxed. Smart planning allows you to maximize what you pass on while minimizing taxes. Strategies like gifting, setting up trusts, and making charitable donations can help you achieve this.
  3. Ensure Your Wishes Are Followed
    A solid estate plan ensures that your assets go to the people you want. It can help prevent disputes among family members and make the process easier for your loved ones. The sooner you start planning, the better control you have over your legacy.
  4. Take Advantage of Current Laws
    The current high exemption gives you a unique chance to transfer wealth. Consider making gifts up to the exemption amount now while you can. Establishing irrevocable trusts can also help protect your assets from taxes and provide for your heirs during your lifetime.

Steps to Take Right Away

  1. Review Your Estate Plan
    Look over your current estate plan with one of our attorneys. Make sure it reflects your current financial situation and goals, especially with the potential for tax changes.
  2. Consider Gifting
    Think about whether gifting strategies could benefit you. Taking advantage of this while the exemption is high could lead to significant benefits.
  3. Explore Trust Options
    Consider setting up irrevocable trusts to manage your assets and reduce estate taxes. These trusts can protect your wealth and ensure your wishes are followed.
  4. Stay Informed
    Keep an eye on any news about estate tax laws. We will help you stay updated on changes that could affect your planning.

Conclusion

It is crucial to act now and schedule a meeting to discuss the potential changes to estate taxes if your assets exceed $3.5 million, as these developments could significantly impact many of my clients, and appointments will fill up quickly. 

With uncertainty surrounding the estate tax exemption, now is the perfect time to focus on your estate planning. By taking steps today, you can protect your legacy, secure your loved ones’ future, and prepare for any tax burdens. The peace of mind that comes from knowing your estate plan is solid is invaluable. Don’t wait for tax changes to impact your estate—act now to safeguard your financial future. 

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