How the TCJA’s Expiring Provisions May Affect Your Estate Plan

The Tax Cuts and Jobs Act (TCJA) of 2017 brought significant changes to federal estate, gift, and generation-skipping transfer (GST) tax exemptions. This blog will explore the key changes and what they mean for your estate plan.

The Current Exemptions

As of January 2024, the federal estate, gift, and GST tax exemptions are:

• $13.61 million per individual

• $27.22 million per married couple

These exemptions mean you can transfer this amount to your heirs without incurring federal taxes.

The Sunset of the TCJA

The TCJA's provisions are set to expire on December 31, 2025. After this date, exemptions will revert to pre-2018 levels, adjusted for inflation. This means:

• $7 million per individual

• $14 million per married couple

This drop in exemptions could lead to significant federal taxes on wealth transfers starting in 2026 unless Congress acts.

Strategies to Consider

Here are some strategies to consider before the 2026 exemption reduction:

• Lifetime Gifting: Transfer assets now to lock in the higher exemption. Gifting during life removes the growth on those assets from your estate, reducing your taxable estate.

  
  

• Use Annual Exclusions: Take advantage of the annual gift tax exclusion, which allows you to give up to $18,000 per recipient in 2024 without reducing your lifetime exemption.

  
  

• Trust Planning: Consider setting up trusts, such as Spousal Lifetime Access Trusts (SLATs) or Dynasty Trusts, to manage wealth transfers and protect assets for future generations.

With the TCJA exemptions expiring after 2025, it’s crucial to review your estate plan now. If your estate exceeds or is close to the current exemption amounts, speak with an estate planning attorney to explore your options.

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.