Don't Wait to Lock In High Estate and Gift Tax Exemptions
One of the most sweeping changes to U.S. tax code in modern history could be on the horizon. Now is the time to maximize the legacy you leave your loved ones.
Don’t let an unknown tax future catch you unprepared. That’s the message I have for Americans ahead of a tax change set to impact millions of us.
When enacted in 2017, the Tax Cuts and Jobs Act (TCJA) was the most sweeping overhaul to U.S. tax code in decades. And if certain provisions of it are allowed to expire in 2025 as planned, virtually every American will be impacted if they don’t take steps now.
The 2024 presidential election is just days away, and with it will likely come many tax-related changes impacting millions of Americans. If you haven’t reviewed your financial plan recently, and especially those with an estate plan, I can’t emphasize enough the urgency of taking advantage of these historically high exemptions now, today. Not after the election. Now. This is a very unique opportunity to maximize the legacy you leave for your loved ones.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Tax planning is a long, involved process, and waiting is not a wise option. Whoever your adviser is, contact them today and get ahead of it to help you navigate the significant complexities involved.
There will always be uncertainty about the future of taxes. In this case, however, you have the opportunity to act now and reap the benefits long term.
Let’s simplify what’s at stake for Americans
Typically, the federal government imposes a transfer tax of up to 40% on certain transfers of wealth, in the form of an estate tax that applies at death or a gift tax on lifetime transfers. An additional generation-skipping transfer tax — potentially up to 40% — can apply if you make these transfers to a grandchild or further descendant. There could be state-level estate or inheritance taxes involved, too, depending on where you live. However, under the TCJA, individuals are currently allowed to transfer a significant amount of assets out of their estates without having to pay any federal transfer taxes.
The TCJA provides for an estate and gift tax lifetime exemption of $13.61 million for individuals in 2024 ($13.99 million in 2025), which means you can gift up to this amount — above which any gifting would be subject to a tax of up to 40%.
This exemption is historically high — but also potentially time-limited. The increased exemption is scheduled to "sunset" after 2025 and drop back to about $7 million on January 1, 2026.
The only way to take full advantage of the increased exemption is to make significant lifetime gifts before the sunset date.
Notably, these gifts cannot be retroactively taxed if the TCJA provisions are not renewed.
Maximizing the upside of this opportunity often requires an “all of the above” approach, which includes trust planning, lifetime gifts and the use of life insurance. Having a comprehensive, flexible holistic plan in place that incorporates life insurance can help maximize the amount of assets your heirs receive.
In other words, the best way to take advantage of the opportunity ahead is to work with a financial professional who can see the full picture of your financial and tax situation. Your adviser can then assemble the right team and put a plan in place that ensures you can benefit from the exemption now and preserve wealth for generations to come.
Consider taking action now
Do not delay this any longer. The clock is ticking. Given everything involved with estate planning of this magnitude, the time to act will expire faster than you may think. Lead time for some individuals can be anywhere from six months to longer than one year.
It is not a quick process to figure out how much of your wealth you can transfer, to whom or in what form (e.g., should your children receive cash or a portion of the family business? How much? Should they receive it outright or in trust?). And even after the big decisions are made, getting analyses done and documents drafted by attorneys, accountants and other advisers is not always a quick endeavor.
You also need to consider the unprecedented demand and competition for qualified professionals — attorneys, accountants, etc. — and how that will affect your timeline for getting a plan into place and executing it.
The future of the tax code will always be in flux. Trying to anticipate these changes can be difficult, if not impossible. Instead, investors, business owners and people with inherited wealth should prioritize flexibility to build protection against future uncertainty.
If the higher exemptions are extended, you’ll have already locked in the benefits ahead of time. Get in touch with a qualified financial planner now to help guide you through the process and create a long-term plan that meets your needs.
Related Content
- States That Won't Tax Your Death
- Should You Change Your Estate Plan Before the Election?
- From Trusts to Taxes: Is Your Estate Plan Ready?
- Five Big Estate Planning Mistakes and How to Avoid Them
- Revocable vs. Irrevocable Trusts: What You May Not Know
-
How to Avoid the Financial Quicksand of Early Retirement LossesSequence of returns — experiencing losses early on — can quickly deplete your savings, highlighting the need for strategies that prioritize income stability.
-
How an Elder Law Attorney Can Help Protect Your Aging ParentsIf you are worried about older family members or friends whose financial judgment is raising red flags, help is out there — from an elder law attorney.
-
Q4 Post-Mortem From an Investment Adviser: Year of ResilienceFinancial pro Prem Patel shares his take on how markets performed in the fourth quarter of 2025, with an eye toward what investors should keep in mind for 2026.
-
This Is How Early Retirement Losses Can Dump You Into Financial Quicksand (Plus, Tips to Stay on Solid Ground)
Sequence of returns — experiencing losses early on — can quickly deplete your savings, highlighting the need for strategies that prioritize income stability.
-
How an Elder Law Attorney Can Help Protect Your Aging Parents From Financial Mistakes
If you are worried about older family members or friends whose financial judgment is raising red flags, help is out there — from an elder law attorney.
-
Q4 2025 Post-Mortem From an Investment Adviser: A Year of Resilience as Gold Shines and the U.S. Dollar Dives
Financial pro Prem Patel shares his take on how markets performed in the fourth quarter of 2025, with an eye toward what investors should keep in mind for 2026.
-
'Donroe Doctrine' Pumps Dow 594 Points: Stock Market TodayThe S&P 500 rallied but failed to turn the "Santa Claus Rally" indicator positive for 2026.
-
Is Your Emergency Fund Running Low? Here's How to Bulk It Back UpIf you're struggling right now, you're not alone. Here's how you can identify financial issues, implement a budget and prioritize rebuilding your emergency fund.
-
An Expert Guide to How All-Assets Planning Offers a Better RetirementAn "all-asset" strategy would integrate housing wealth and annuities with traditional investments to generate more income and liquid savings for retirees.
-
Forget FIRE: Why ‘FILE’ Is the Smarter Move for Child-Free DINKsHow shifting from "Retiring Early" to "Living Early" allows child-free adults to enjoy their wealth while they’re still young enough to use it.
-
7 Tax Blunders to Avoid in Your First Year of Retirement, From a Seasoned Financial PlannerA business-as-usual approach to taxes in the first year of retirement can lead to silly trip-ups that erode your nest egg. Here are seven common goofs to avoid.
