Neon tax sign for the estate taxOne of the first questions in any estate planning consultation is whether you should worry about the estate tax. While things have been generally pretty stable over the past few years, the rollercoaster ride of the Estate Tax Exclusion is one journey worth exploring. 2024 could hold some significant surprises, and it's important not to be left playing catch-up when the ride ends!

If you've got a considerable estate and have grandchildren, one of your primary objectives may be to leave a plan for a legacy for your grandkids.

Especially if you have a sizeable estate, you may also want to make sure to avoid leaving behind a battle over your estate.

One common thread throughout is going to be keeping an eye on the federal estate tax exclusion as part of your plan.

The 2023 Federal Estate Tax Exclusion

As it stands in 2023, every American can leave up to $12.92 million to their loved ones without having to worry about federal estate tax. Sounds like a pretty sweet deal, right? But things are always changing and planning accordingly is key.

As we look into our financial crystal ball for 2024, the picture isn't totally clear. There are no exact figures, no concrete predictions. The legislative roulette wheel is continuously spinning, and the final landing spot can change based on inflation or new laws. It's just part of the game!

Inflation will be the final factor that locks in the 2024 number and if it's 4% that is used, then the exclusion should be around $13.44 million for individuals ($16.88 million for couples.

Once the final number is locked in, you'll see all kinds of news about it and then we can officially adjust your estate plan if it's going to be a factor for your estate plan.

2026 and the Sunset Provision

And then there's the sunset provision. In 2026, this will cause today's exemptions to be null and void, which could drastically change the landscape. After 2025, our current lifetime exclusion will likely be sliced in half, meaning those wealthy folks out there might be facing lower exclusion limits.

Taking a moment to glance back at tax history, we recall the $11.7 million exemptions in 2021 that plummeted to an inflation-adjusted $5 million in 2022. A stark reminder of how quickly things can change in the world of estate tax law.

Wrapping things up, the unsolved mystery of the 2024 Estate Tax Exclusion is still very much in play. The fact is, though, that those with sizable estates must stay vigilant. It's crucial to seek professional advice and remain informed - doing so could literally save you a fortune. So, are you ready to take control of your estate planning? 

Just remember: in the world of estate planning law, knowledge is power.

Do You Need an Estate Plan?

If you need an estate plan or maybe just need to update one you had prepared before, let's schedule a Legal Strategy Session online or by calling my Edina, Minnesota office at (612) 294-6982 or my New York City office at (646) 847-3560. My office will be happy to find a convenient time for us to have a phone call to review the best options and next steps for you to work with an estate planning attorney to get your plan prepared and implemented.

Andrew Ayers
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I work with business and estate planning clients to craft legal solutions to protect their legacies.
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