Our advisors utilize their experience and expertise and that of their colleagues to develop the best solutions for your complex personal and professional financial situations.
Actionable planning strategies to inform and guide your decision-making.
July 1, 2021
Under current legislation, as a result of the Tax Cuts and Jobs Act of 2017, each individual can gift (during their lifetime) or transfer (at death) about $11.2M of assets, free of federal tax. Thus, for married couples, the amount is about $22.4M. These exemption thresholds are scheduled to increase by the rate of inflation through the end of 2025, the point at which current legislation sunsets. Any gifts made in excess of these thresholds, either during life or at death, are subject to a 40% federal tax. Obviously, these are big exemption numbers, but if you’re young and continue to work, these thresholds can become relevant in a hurry. Moreover, these thresholds may be reduced by future legislation. Avoiding a tax haircut such as 40% should most certainly be a planning priority for you and your family.
We find that financial modelling is a good place to start. A number of inputs around life expectancy, investment returns, future savings, and anticipated living expenses can generate at least initial outputs with respect to your anticipated wealth at death. These models, tailored over time, can serve as a guiding light with respect to gift and estate planning. Along the way, here are some of the many strategies and techniques that may be used to help reduce the size of your taxable estate; and thus, help eschew estate tax:
Working with an advisory firm with in-house estate planning expertise to help navigate these potential planning opportunities can be of significant value.
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Aaron is a Partner based in the San Francisco office. He provides comprehensive investment and planning advice to individuals. While Aaron works with a wide...
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