Effective Jan. 1, 2024, the federal estate tax exemption increased to $13,610,000, or $27,220,000 for married couples filing joint tax returns. This means that individual taxpayers can transfer up to $13.61 million in assets to their heirs (or up to $27.22 million for married couples filing jointly) during life or at death without incurring federal gift and estate taxes. Anything above the excluded amounts would be subject to a 40 percent gift or estate tax rate. As a word of caution, however, these higher exemptions are set to expire on Dec. 31, 2025, and revert to their 2017 limits of approximately $5.6 million in 2026.
Without knowing what Congress and shifting political priorities will occur over the next few years, high-net-worth families would be wise to plan appropriately under the guidance of experienced financial advisors and tax consultants to maximize the effective use of the increased exemptions during the time it is available. This would also include maximizing annual gifts to trusts or taking advantage of an inflation-adjusted increase in the annual gift tax exclusion that allows individuals to transfer up to $18,000 per year to as many people as they choose free of gift taxes. For married couples filing joint returns, the transfer tax exclusion is $36,000 per beneficiary. These gifts effectively transfer assets out of an individual’s taxable estate to family members or other named beneficiaries and allow grantors to use trust assets to fund life insurance policies or, in some instances, pay income tax liabilities while they are alive.
About the Author: Lee F. Hediger is a co-founding director with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs and a registered representative with PWA Securities, LLC (PWAS). He can be reached at the firm’s Fort Lauderdale, Fla., office at (954) 712-8888 or info@provwealth.com.
Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., 19th Floor, Ft. Lauderdale, FL 33301Â (954) 712-8888.
 Lee F. Hediger is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.
This material is being provided for information purposes only and is not a complete description or a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the preceding material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.
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Updated on February 5, 2024