Estate Planning — The Use it or Lose it Scenario

{3 minutes to read}  Today, I want to reflect on some of the issues about estate planning based upon our current estate tax rules. Under the Trump Administration, the estate tax rules were changed very liberally to allow people to give away a tremendous amount of money, creating great opportunities to transfer wealth to the next generation and get the growth of these assets out of your estate. Currently, the estate tax exemption for an individual is over $12 million. Plus, if you’re married, we get an additional $12 plus million, bringing the total amount that could be passed, free from the 40% Federal estate tax, close to $25 million.

This amount is indexed, so, it goes up each year. Next year it’ll be a little bit more than $25 million. The following year, it will be worth a little bit more. But at midnight December 31st, 2025, the rules will sunset back to rules before the Trump tax law change, cutting it virtually in half. So, by the time the estate tax grows, the exemption will have grown to let’s say $27 million by 2025, it will then be cut in half, probably to around $13 million (six and a half million dollars per person).

Why am I bringing this up at this time? There is plenty of time before December 31st, 2025, right? Well, not really.

Time has a way of moving on. We have 36 months left, which is what we call a “use it or lose it” scenario. When this tax law sunsets, if there have been no tax law changes, we are going to lose out on the opportunity to pass this record amount of wealth to the next generation. So now is a good time to begin the process. Whether it’s gifting $50,000, $100,000, a million, $10 million, $20 million, or even the whole $25 million. The sooner we start making gifts, the quicker the growth of those assets will be out of our estate and growing for the benefit of our heirs and loved ones.

If you have questions, and you would like to review your particular estate planning issues, please give us a call.

Thanks very much and have a great day.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS.  Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

This material is for informational purposes only. Neither APFS nor its Representatives provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions. American Portfolios Financial Services, Inc.(APFS) and American Portfolios Advisors, Inc.(APA) are not affiliated with any other named business entities mentioned.