Estate Planning Update: IRS Announces Increased Tax Exemptions for 2024
The Internal Revenue Service (IRS) has recently announced significant increases in the estate and gift tax exemptions for 2024. This means that individuals can transfer more assets to their heirs without incurring gift or estate taxes.
Key Highlights of the 2024 Estate and Gift Tax Exemption Increases
Estate Tax Exemption: The federal estate tax exemption will increase from $12.92 million in 2023 to $13.61 million in 2024. This means that individuals can transfer up to $13.61 million to their heirs without incurring estate taxes.
Gift Tax Exemption: The annual gift tax exclusion will increase from $17,000 in 2023 to $18,000 in 2024. This means that individuals can gift up to $18,000 per person, per year without incurring gift taxes.
These increases are due to adjustments based on the cost of living index. The higher exemptions are intended to provide taxpayers with greater flexibility in planning their estates and transferring assets to their beneficiaries.
Implications of the Increased Exemptions
The increased estate and gift tax exemptions have several significant implications for individuals and families:
Reduced Tax Burden: The higher exemptions mean that fewer individuals will be subject to estate or gift taxes, potentially saving them a substantial amount of money.
Increased Flexibility: Individuals have more flexibility in planning their estates and transferring assets to their heirs without tax implications. This allows for greater control over the distribution of wealth.
Enhanced Estate Planning Opportunities: The increased exemptions provide an opportunity to review and update estate plans to ensure they align with the current tax laws and individual circumstances.
Estate Planning Recommendations
In light of these changes, individuals must review their estate plans to ensure they take advantage of the increased exemptions and align with their current goals. Here are some recommendations:
Consult with an Estate Planning Attorney: Seek professional guidance from an experienced estate planning attorney to review your existing plan or create a new one that effectively utilizes the increased exemptions.
Review Beneficiary Designations: Ensure that beneficiary designations for retirement accounts, life insurance policies, and other assets are up-to-date and reflect your current wishes.
Consider Lifetime Gifting Strategies: Take advantage of the increased gift tax exemption by making strategic lifetime gifts to reduce the value of your taxable estate.
Regularly Review Your Estate Plan: Estate planning is an ongoing process. Regularly review your plan to ensure it remains effective and aligned with your changing circumstances.
The increased estate and gift tax exemptions provide individuals with greater control over their wealth transfer strategies and the distribution of their assets. By working with an experienced estate planning attorney and taking proactive measures, individuals can effectively utilize these exemptions and safeguard their legacy.
For more detailed information you can visit the IRS website here.
In addition, don’t hesitate to contact me and set up an appointment to determine if your current estate plan needs updating, or if you need to set one up.