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Practical Planning Tip: Year-end estate planning

December 08, 2023

Today’s Practical Planning Tip By ParkBridge Wealth Management will discuss the year-end planning idea of " Year-end estate planning considerations."

The federal unified estate and gift tax exemption for 2023 has been at an all-time high of $12.92 million, or $25.84 million per married couple. I’ve read 

Given an extremely divided Congress, many of the changes imposed under the Tax Cuts and Jobs Act, especially these all-time high increased exemption amounts, will sunset after December 31, 2025, with the laws scheduled to revert to those that existed prior to the passing of this Act.

Planning needs to be flexible to adapt to any changes in legislation. However, absent any new legislation, these high exemption thresholds are temporary and are set to be significantly reduced at the end of 2025 to a pre-2017 level of $5 million, adjusted for inflation. The good news is there is still about two more years to take advantage of planning opportunities to optimally utilize these increased exemption amounts.

Depending on your assets, current estate and gift tax exposure, and broader cash flow and estate planning goals, there are GIFTING strategies that should be considered prior to 2026 to take advantage of this window of opportunity. There may also be opportunities for large lifetime gifts, considering the historically high level of the exclusion amount.

Planning Tip: Benefits of utilizing a Spousal Limited Access Trust or a SLAT: SLATs are irrevocable gifting trusts that move assets and future appreciation outside of one’s taxable estate but include a spouse as a beneficiary so that the grantor has indirect access to the funds in case they are needed in the future. SLATs are something I wrote about and spoke about last year. I also have an upcoming webinar on SLATs in February, so I won’t go into the weeds here.

Also remember, In order to have SLATs created by spouses for the benefit of the other recognized for gift tax purposes, it is often advised to create them at DIFFERENT times, even in different tax years. Therefore, to complete these prior to the sunset at the end of 2025, you would need to start no later than 2024.

You can watch the FULL video here.