Take Advantage of the Estate Exemption Now … Before It’s Gone

• 2 min read

Photo of a house, money, and a gift, to represent an estate trust
Three strategies for cutting estate taxes that wealthy Americans should consider before the law changes in 2025.

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Photo of a house, money, and a gift, to represent an estate trust

As we head into election season, AMG clients should be aware that unless Congress extends the 2017 Tax Cuts and Jobs Act before it expires at the end of 2025, the per-person estate and gift tax exemption of $13.6 million will revert to about $7 million.

There are strategies to take advantage of the higher exemption before it ends, but you should act now. If you have a taxable estate, you should consider:

Irrevocable Life Insurance Trust – This instrument is used to own life insurance policies. Typically, insurance proceeds payable at death will not be included in the decedent’s probate estate, nor will they be subject to taxes if the policy has been transferred to the trust for at least three years prior to the insured’s death. Life insurance purchased by the trust after the three years is not included in the estate.

Lifetime gifting – In 2024, the annual gift tax exclusion is $18,000. There is no limit to the number of annual exclusion gifts that a donor can make. A married couple can collectively give $36,000 to each donee in 2024 without utilizing any of their lifetime exemption or paying gift taxes.

Spousal Lifetime Access Trust (SLAT) – The high lifetime gift-tax exemption is responsible for the resurgence of the SLAT as an effective estate-planning technique. It is like the credit-shelter trust in that it seeks to shelter assets for the spouse and family members. While a credit-shelter trust is not funded until the grantor’s death, the SLAT is funded when the grantor is alive. One advantage of doing so is to fully or mostly utilize the current year lifetime gift and estate tax exemption and to get future appreciation of the assets in the trust out of the taxpayer’s estate.

TAX UPDATE: Last month, the Supreme Court upheld the 2017 Mandatory Repatriation Act, allowing a one-time tax on any realized but undistributed income (earned between 1986 and Dec. 31, 2017) held by Americans in foreign companies. The narrow ruling stated it has no bearing on the constitutionality of a proposed wealth tax. The ruling did not address whether “realization” is a constitutional requirement to be taxed.

HOW AMG CAN HELP

Not a client? Find out more about AMG’s Personal Financial Management (PFM) or to book a free consultation call 303-486-1475 or email us the best day and time to reach you.

This information is for general information use only. It is not tailored to any specific situation, is not intended to be investment, tax, financial, legal, or other advice and should not be relied on as such. AMG’s opinions are subject to change without notice, and this report may not be updated to reflect changes in opinion. Forecasts, estimates, and certain other information contained herein are based on proprietary research and should not be considered investment advice or a recommendation to buy, sell or hold any particular security, strategy, or investment product.

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