Maillie wants to ensure our clients are aware that the significant increases in lifetime gift and estate exemptions as provided under the 2018 Tax Cuts and Jobs Act are scheduled to sunset at the end of 2025. The 2018 (TCJA) significantly increased the lifetime gift and estate exemptions from $5.6 million to $11.18 million per individual. With an inflation adjusted exemption the lifetime exemption for 2023 is $12.92 million per individual or $25.84 million for a married couple. The increased exemption is scheduled to sunset at the end of 2025. As a result, the exemption will drop down to the previous $5 million dollar range per individual which is expected to be adjusted upward for an inflationary adjustment. The bottom line is that with current law scheduled to sunset in 2025, there is expected to be a significant reduction in the lifetime gift and estate exemption limits.
Have you considered the opportunity of significantly increased exemptions afforded under the 2018 (TCJA) and will you act on your succession plan before the Act sunsets in 2025? Don’t let the opportunity to transfer significant wealth under the increased exemption limits pass you by or be caught in a last-minute scramble as the exemption limits sunset.
The opportunities provided under the 2018 (TCJA) should be considered by closely held business owners in their succession planning. Many closely held businesses remain in the family and are transferred from generation to generation. These closely held businesses are many times the largest asset of the family and can have significant value. Federal estate tax rates on the taxable amount of the estate are at 40% for taxable estate assets over $1 million. If appropriate steps are not taken in the planning process, there could be a significant future tax burden on your family with respect to estate tax.
We encourage you to reach out to the experts in our valuation department for additional information on succession planning and the valuation process.
Gregory J. Shank CPA, CVA
