Tax Monitor
Estate Planning Forecast: Cloudy with a Chance of Sunset
January 7, 2025
With the new year, you have no doubt been inundated with messages nudging you to make a fresh start on any number of things: eating better, saving money, going to the gym, getting more sleep, or stopping a bad habit. As we ring in 2025, the law is giving us another nudge to take a fresh look at our estate plans.
The Tax Cuts and Jobs Act of 2017 (TCJA) increased the unified gift and estate tax exemption amount to $10 million (adjusted for inflation). The exemption amount currently stands at $13,990,000 per person for decedents dying and gifts made in 2025 ($13,610,000 for decedents dying and gifts made in 2024). If no new legislation is enacted, the TCJA is set to expire or “sunset” on January 1, 2026. If the TCJA expires, the exemption amount is set to revert to pre-TCJA levels, which is $5,000,000 adjusted for inflation (estimated to be $7,000,000 indexed for inflation).
Unfortunately, we have no radar or satellite – or crystal ball – to forecast whether President-elect Trump and the new Congress will extend the estate tax provisions of the TCJA. While the odds are better now that the exemption will be extended, based on the possibility of a sunset of the exemption, we encourage you to revisit your estate plans in light of the potential extension and be prepared if for some reason the exemption is not extended. If the exemption is not extended, there are some additional planning techniques you may consider implementing now to take advantage of the larger exemption amount while it is available. Because some of these strategies require additional time and steps to implement, it is best to reach out now to discuss those techniques rather than later in the year.
Taking a fresh look at your estate plan also ensures that your plan accounts for any major life events that may have occurred since you originally prepared your estate plan, such as a new addition, death, or divorce. In addition, if your estate plan includes trusts, it is advisable to dust off those trust binders and speak with your attorneys, CPAs, and financial advisors about how the trusts are funded or will be funded upon the occurrence of certain events. For your estate plan to work as you intended, it is important to ensure that your legal documents and your beneficiary designations are aligned and current.
We will continue to monitor and report on developments related to the TCJA and the unified gift and estate tax exemption. Please reach out to your primary Jackson Kelly contact for questions or advice regarding your estate plan.