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Estate Planning and the 2024 Presidential Election

by | Oct 22, 2024 | Estate Planning

As we approach the 2024 U.S. Presidential Election, many Americans are focusing on candidates’ platforms and potential policy changes. However, amidst the political fervor, one critical area often overlooked is estate planning—particularly with the impending sunset of key provisions from the Tax Cuts and Jobs Act (TCJA) of 2017. With significant tax reforms on the horizon, now is the time to reassess your estate planning strategy.

The TCJA’s Impact on Estate Taxes

When the TCJA was enacted in December 2017, it made substantial changes to estate tax law. Among the most noteworthy was the doubling of the estate tax exemption. For 2024, this exemption stands at $13.6 million for individuals and $27.2 million for couples, significantly reducing the number of taxpayers liable for estate taxes. This means that, as of now, a majority of Americans can pass on their wealth without the burden of estate taxes.

However, the clock is ticking. The TCJA’s provisions, including the increased estate tax exemption, are set to expire on December 31, 2025. If these provisions sunset, the exemption will revert to its pre-TCJA levels, potentially dropping to $5.5 million for individuals and $11 million for couples (adjusted for inflation).

Planning Ahead: What Should You Do?

Given the potential for significant tax reform and the expiration of the TCJA provisions, it’s crucial to take proactive steps in your estate planning. Here are some strategies to consider:

1. Review and Update Your Will and Trusts: Ensure that your estate planning documents reflect your current wishes and the potential changes in tax law. This includes revisiting the terms of your trust and any beneficiaries you may have designated.

2. Consider Lifetime Gifting: With the current high exemption limits, now may be the best time to make significant gifts. By gifting assets before the exemption reverts, you can reduce the size of your taxable estate. Remember, you can gift up to $18,000 per recipient annually without triggering gift taxes.

3. Consult a Tax Professional: Engaging with a tax advisor and estate planning attorney can provide clarity on how upcoming changes might affect your situation. They can help you develop a strategy tailored to your unique circumstances.

4. Stay Informed About Legislative Changes: Keep an eye on the election and subsequent legislative sessions. Tax policy is often a key discussion point, and changes could come swiftly depending on which party gains power and their respective agendas.

5. Consider Your Charitable Goals: If philanthropy is part of your estate plan, consider setting up charitable trusts or making larger gifts to charities. This can both reduce your estate tax liability and fulfill your charitable goals.

Timing is Everything

The potential expiration of the TCJA’s provisions presents both challenges and opportunities for estate planning. As we head into a critical election year, the landscape of tax law may shift significantly. Taking the time now to review your estate plan can provide peace of mind and ensure that your wishes are honored, regardless of what changes lie ahead.

Don’t wait until the last minute. By planning strategically now, you can optimize your estate’s tax situation and secure your legacy for future generations.

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