Generational Wealth Planning: Act Now Before Estate Tax Exemptions Change
High-net-worth individuals and families have a limited window to maximize their estate and gift tax exemptions before they potentially decrease by about half at the end of this year. The Tax Cuts and Jobs Act (TCJA) of 2017 is set to sunset, impacting generational wealth transfer strategies.
What's at Stake?
Without Congressional action, the federal estate tax exemption will likely revert to pre-TCJA levels:
- Individual exemption: around $5 million (indexed for inflation) from $13.99 million in 2025
- Couple exemption: around $10 million (indexed for inflation) from $27.98 million in 2025
Strategies for Wealth Transfer
- Outright Gifts: Transfer wealth to loved ones ahead of schedule to avoid higher taxes later.
- Irrevocable Trusts: Designate beneficiaries and distributions while taking advantage of current exemptions.
- Spousal Lifetime Access Trusts (SLATs): Leverage high exemptions for asset transfer while preserving wealth for heirs.
- Irrevocable Life Insurance Trusts (ILITs): Hold life insurance policies outside the estate to avoid taxes and provide liquidity.
- Credit Shelter Trusts (CSTs): Maximize federal estate tax exemptions for married couples.
- Charitable Giving: Review strategies to maximize donations before limits decrease.
Next Steps
Consult with financial, tax, and estate advisors to determine the best approach for your situation. Even with potential legislative changes, reviewing and adjusting your estate plan now can help minimize future tax burdens and support your financial goals.
Meta AI Response: Generational Wealth Planning: Act Now Before Estate Tax Exemptions Change High-net-worth individuals and families have a limited window to maximize their estate and gift tax exemptions before they potentially decrease by about half at the end of this year. The Tax Cuts and Jobs Act (TCJA) of 2017 is set to sunset, impacting generational wealth transfer strategies. What's at Stake? Without Congressional action, the federal estate tax exemption will likely revert to pre-TCJA levels: Individual exemption: around $5 million (indexed for inflation) from $13.99 million in 2025 Couple exemption: around $10 million (indexed for inflation) from $27.98 million in 2025 Strategies for Wealth Transfer Outright Gifts: Transfer wealth to loved ones ahead of schedule to avoid higher taxes later. Irrevocable Trusts: Designate beneficiaries and distributions while taking advantage of current exemptions. Spousal Lifetime Access Trusts (SLATs): Leverage high exemptions for asset transfer while preserving wealth for heirs. Irrevocable Life Insurance Trusts (ILITs): Hold life insurance policies outside the estate to avoid taxes and provide liquidity. Credit Shelter Trusts (CSTs): Maximize federal estate tax exemptions for married couples. Charitable Giving: Review strategies to maximize donations before limits decrease. Next Steps Consult with financial, tax, and estate advisors to determine the best approach for your situation. Even with potential legislative changes, reviewing and adjusting your estate plan now can help minimize future tax burdens and support your financial goals.
