Understanding the Estate and Gift Tax Exemption
Think of this as a "coupon" you can use in two ways:
- During life: Gift assets tax-free to others
- At death: Pass assets tax-free to chosen beneficiaries
Current High Exemption Levels
We've enjoyed historically high exemption levels since 2017:
- 2023: Just under $13 million per person
- 2024: Just over $13.5 million per person
- Married couples: Can essentially double these amounts
The 2026 Sunset Provision
Beginning in 2026, these limits will drop by approximately 50%. Projections suggest around $6.5 million per person (inflation-adjusted). Learn more about preparing for tax law changes.
What's Included in Estate Tax Calculation
Everything you own and control at death:
- Real estate
- Financial accounts
- LLC and corporation ownership interests
- Personal property
- Life insurance (in most cases)
Tax Rates
Estate tax rates range from 18-40%. Once you have $1 million or more in exposed assets, you're looking at a 40% tax rate.
The Importance of Acting Now
Don't Wait Until Late 2025
- Advanced planning techniques are complex and take time
- You don't want to be rushed or work with an attorney who isn't busy (which should be a red flag)
Additional Benefit of Early Action
Planning now captures future appreciation outside your taxable estate. If your $10 million net worth grows to $12 million by 2025, waiting means that $2 million in appreciation has already occurred inside your taxable estate.
By acting now, we can move assets outside your taxable estate so future appreciation happens outside the estate, reducing your overall exposure.
If this information raises questions or concerns about your situation, please reach out to our experienced team.
