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Important Update to Federal Estate and Gift Tax Exemption and Exclusion Amounts for 2024

2/21/2024 | General, News & Resources

The purpose of the exemption and exclusion amounts is to protect taxpayers against the burden of federal estate and gift taxes, each currently at a flat rate of 40%. By taking advantage of these allowances, you can strategically plan your estate to minimize tax liabilities and maximize the preservation of your assets for future generations.

In 2024, the annual gift tax exclusion rises to $18,000 per recipient per year. This means you can gift up to $18,000 to any number of individuals without triggering the gift tax or a filing requirement.  If you are married, your spouse can also gift $18,000 to those individuals. 

The lifetime gift tax and estate tax exemption has increased to $13.61 million per individual. This substantial exemption provides a significant opportunity for tax-efficient wealth transfer strategies.  The exemption amount is currently at an all-time high but is scheduled to be reduced by half on January 1, 2026, absent an act of Congress. 

There are various ways to utilize your exemption amount effectively:

  1. Funding a Spousal Lifetime Access Trust (SLAT): A SLAT allows you to transfer assets to an irrevocable trust for the benefit of your spouse, utilizing your lifetime exemption. This strategy removes future appreciation from your estate while providing your spouse with access to the trust assets during their lifetime.
  2. Making Gifts: Utilizing the annual gift tax exclusion, you can make tax-free gifts to your loved ones each year while preserving your exemption amount. This can be an effective way to transfer wealth while reducing the size of your taxable estate.
  3. Utilizing at Death: By incorporating estate planning strategies such as trusts and other tax-efficient mechanisms, you can ensure that your assets are distributed according to your wishes while minimizing exposure to federal estate taxes upon your death.

If you believe you can benefit from planning to minimize or “freeze” the value of your estate to minimize you and your family’s potential estate tax, we would welcome the opportunity to schedule a time to speak with someone in our Trusts and Estates department.  Our information is below.  We look forward to continuing to serve you. 

Kenneth Pugh, Esquire

Assistant: Jenny Van Pelt

Maury Reiter, Esquire

Assistant: Janet L. Whalen

Joanne Cicala

Assistant: Jenny Van Pelt