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Current estate planning trends worth considering

On Behalf of | Jan 31, 2024 | Estate Planning | 0 comments

Estate planning, an essential aspect of financial strategy, has been the subject of significant changes of late, with trends reflecting both economic shifts and evolving personal priorities. One of the most noteworthy developments is an adjustment in the federal estate tax exemption limits.

This change, driven by legislative updates, has had a direct impact on estate planning strategies. It’s important for individuals and families to understand how these adjustments might influence their long-term planning.

Adjustments in Lifetime Estate Exemption

The lifetime estate exemption amount has undergone an increase in 2024 to a maximum of $12,920,000 per individual or $25,840,000 for couples. This exemption determines the amount one can pass on to heirs without incurring federal estate taxes. This change provides an opportunity to revisit and potentially revise their strategies.

This increase allows for more efficient wealth transfer. It impacts wealthy and middle-class families by providing more flexibility in how they manage and distribute their assets. This change in the exemption amount emphasizes the importance of regular reviews of estate plans to ensure they align with current laws and personal circumstances.

Evolving Trends in Annual Gifting Limits

In addition to the lifetime exemption, the annual gifting limits have also seen adjustments. These limits dictate how much money or property one can give to another person in a single year without it counting against the lifetime exemption.

The increase to $17,000 per person per recipient of these limits for 2024 reflects an adaptation to economic conditions, such as inflation. This increase means a couple can gift $17,000 each to the same person for a total of $34,000 going to that person. It’s a significant trend for those looking to reduce the size of their taxable estate through gifting.

This change encourages a more proactive approach to estate planning, with individuals considering yearly gifts as a strategic opportunity. It’s particularly beneficial for those wishing to support family members, such as contributing to a grandchild’s education fund or assisting a child with a down payment on a home.

By understanding and utilizing these updated gifting limits, those creating an estate plan can more effectively manage their wealth while providing for their loved ones. But, ultimately, due to the personalized concerns inherent in estate planning, working with someone familiar with these matters may be beneficial for anyone trying to plan their estate.