When people learn I am an estate planning attorney, the most common response I get is “Oh my goodness, I have been meaning to do my will for years! I really need to get on that!”
I get it- life is busy and those non-urgent items tend to get pushed down to the bottom of our seemingly endless to-do lists. However, it is the beginning of a new year and time to think about your resolutions. Going to the gym is not an easy routine to start in January, especially if you live in a state with negative temperatures. Why don’t you scratch the gym for now and put estate planning at the top of your list? Come spend an afternoon with me talking about your family over a warm cup of coffee.
Aside from avoiding the gym, there is a very specific reason why 2024 should be your year to plan your estate. The gift and estate tax exemption is at a historic high, meaning families have been able to largely avoid paying death taxes. However, the current exemptions are scheduled to sunset in 2025, cutting the amount that can be passed down tax free by 50%. Because of this scheduled change, the estate planning community is expecting a surge in demand in the second half of 2025. Now is the time to plan ahead and give yourself and your attorney some breathing room to design and execute a well thought out plan.
Under the current laws, each individual has an estate and gift tax exemption of $13.61 million for 2024. In 2025, this exemption will drop back to the prior Tax Cuts and Jobs Act (TCJA) level of $5 million, adjusted for inflation. The current maximum 40% gift and estate tax rate is also set to increase in 2026 to 45%.
Many clients have benefited from taking advantage of the current exemption amount through a combination of strategies that can be implemented in an effective estate plan, including trust structures, generational planning, charitable planning, and annual and lifetime gifting. These strategies, if utilized before 2025, will be effective in reducing your estate and estate tax.
I would be happy to meet with you to discuss your specific estate planning needs and to help you meet your goals. You can contact me at hbalgaard@mmblawfirm.com or at 952-885-5999 to schedule a consultation!
