2024 Estate Planning Opportunities

Lasher Holzapfel Sperry & Ebberson PLLC

The start of a new year is a great time to review your current estate plan or consider creating one. 2024 brings a number of opportunities for creating an estate plan, pursuing gifting strategies, and considering philanthropic goals. Here are a few estate planning opportunities for your consideration this year:

Increased Estate, Gift, and Generation-Skipping Transfer Tax Exemptions

In 2024, the estate, gift, and generation-skipping transfer tax exemptions increased to $13,610,000 per person. This is an additional $690,000 of tax exemption per person, which provides additional gifting opportunities to those individuals who have previously made significant gifts. These exemptions provide a wide range of gifting opportunities including the opportunity to: gift portions of your family business to the next generation, transfer growth stock before the appreciation of that stock creates additional estate tax problems and assist your children with down payments on houses. If you would like to make significant gifts during your lifetime, we strongly recommend that you explore the possibilities during 2024 and 2025 because the exemptions are expected to decrease to approximately $7 million per person as of January 1, 2026, unless Congress acts to maintain the exemption at its current level.

Annual Gift Tax Exclusion – $18,000 Per Person

The 2024 annual gift tax exclusion is now $18,000 per person. This allows a person to gift $18,000 per individual recipient without the requirement to report the gift on a gift tax return. One example of how to use this annual exclusion to further your legacy is to set up a custodial account for each of your children and grandchildren and contribute $18,000 per child/grandchild. If you and your spouse have two children and four grandchildren, this will remove a combined $216,000 from your estate and will allow that money to grow for the benefit of your descendants. This is a great opportunity to reduce the amount of money in your estate this year without being required to file a gift tax return.

Charitable Remainder Trusts

If philanthropy is one of your goals for 2024, a charitable remainder trust may be a great way to accomplish that goal. A charitable remainder trust allows you to transfer cash and/or property to an irrevocable charitable trust in exchange for an annuity payment. Since this gift is made to a charitable trust, it mitigates any capital gain on the property you give to it, and you will receive a charitable deduction that you will have 5 years to use up. For example, a $1m gift from a 65-year-old person could reasonably generate an annuity of $50,000 per year for his/her remaining lifetime and produce a charitable deduction of $456,000 to be used over the next 5 years. Upon death, the remainder interest in the trust passes to charity so it is not included as part of your estate and will avoid any estate tax. This trust gives you the best of both worlds by removing assets from your estate while also allowing you to receive a set amount of money each year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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