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July 7, 2023
The federal estate tax exemption amount is currently $12.92 million per individual ($25.84 million for a married couple) and is scheduled to increase each year through December 31, 2025. On January 1, 2026, the exemption increases are scheduled to sunset. The sunset will result in the estate tax exemption amount reverting to the prior $5 million exemption level adjusted for inflation (approximately $7 million per individual, $14 million for a married couple). Because the sunset reduction is scheduled to occur automatically, congressional action would be needed to prevent the sunset from happening. If Congress remains divided, it is unlikely there will be enough votes to prevent the scheduled sunset at the end of 2025. Given that scenario and the ability to transfer assets up to $12.92 million now, with no clawback after 2025, it would be prudent for individuals who could have an estate tax problem starting in 2026, to consider available estate tax planning options now.
There are a variety of estate tax reduction strategies being employed in the current environment. Here is an overview of some common estate planning strategies to consider:
Even though the strategies discussed above are common, each person’s situation is different, and the strategies discussed above may not best achieve your specific needs. For questions about your current estate plan or help with your estate tax planning needs, please contact our Estate Planning Services specialists at [email protected].
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