At MarksNelson, we're more than just accountants; we're your trusted advisors in navigating the complex landscape of estate planning. It's our mission to keep you informed about critical financial matters that affect your future. Today, we're delving into the intricacies of the lifetime gift and estate tax exemption and what it means for you as an owner of a business in the coming years.
Understanding Gift and Estate Taxes
In the United States, our tax system encompasses both gift and estate taxes, designed to manage the transfer of wealth both during your lifetime (gifts) and after your passing (estate). These tax exemptions have evolved over time to reflect economic changes and legislative updates.
Current Exemption Levels
As of 2024, the lifetime gift and estate tax exemption stands at $13.61 million for individuals and $27.22 million for married couples. These thresholds were increased under the Tax Cuts and Jobs Act of 2017, slated to revert to lower levels by January 1, 2026, unless new legislation intervenes. Estimates suggest a potential decrease to around $7 million per individual and $14 million per couple, adjusted for inflation.
Planning Ahead
Assets transferred in excess of these exemption amounts could get hit with a tax rate as high as 40% for the highest earners. While many estates may not reach these levels, it's prudent to prepare for potential changes. In addition, gifting can lead to additional compliance needs. MarksNelson tax advisors are equipped to prepare all filings, required disclosures and elections, as well as work closely with your attorney to ensure your team is working seamlessly to achieve your goals. Now is a favorable time to strategize how to preserve your wealth efficiently and minimize taxes owed.
Business Ownership Considerations
For many, ownership in a business constitutes a substantial portion of their estate. Proper valuation is crucial for effective estate planning. Whether you need an initial assessment for planning purposes or a comprehensive report to meet IRS requirements, our valuation professionals at MarksNelson are here to help initiate those critical conversations.
Preparing for the Future
While legislative landscapes may shift, proactive planning ensures you're equipped to navigate potential changes. At MarksNelson, we're committed to assisting you in safeguarding your wealth and maximizing your financial strategies.
Reach out to our team today to start planning your financial future with confidence. Together, we'll ensure you're prepared for whatever lies ahead.
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