/// By Melissa E. Sydney & Aviva Sapers
Right now, individuals with large estates have an unprecedented opportunity to move assets out of their taxable estate down to their children and grandchildren. The current tax rules allow individuals to make lifetime gifts of up to $12.92 million during their lifetime ($26.84 million for married couples).
Any lifetime gifts made by an individual reduce the amount that can pass tax-free upon an individual’s death. For example, if an individual gave $5 million to her children during her lifetime and passes away in 2023, she has $7.92 million of exemption available at her death to offset any estate taxes.
Although the lifetime gifting amount has been increasing each year, the law allowing for this expanded gifting amount is scheduled to disappear at the end of 2025. On January 1, 2026, the lifetime gifting amount will be divided in half to approximately $6.5 million per person ($13 million for married couples).
Those who do not take advantage of the expanded lifetime gift exemption will lose the ability to do so after January 1, 2026. Therefore, if you have the opportunity and the means to take advantage of the higher limits now before they revert to much lower numbers, now is the chance to think about gifting strategies to best utilize the current high lifetime gifting amount..
Many clients use irrevocable trusts to facilitate the transfer of assets to their children and grandchildren. An irrevocable trust has many benefits over a direct gift to younger generations. Assets in an irrevocable trust are protected from a beneficiary’s creditors, including a divorcing spouse. It is also possible to structure an irrevocable trust so that the trust assets pass from generation to generation without the imposition of a transfer tax.
If you are interested in different gifting strategies that work for you, we recommend that you speak with us or your estate planning attorney to discuss whether an irrevocable trust or some other creative structure makes sense for you.
Tax and legal advice is not offered by Lion Street Financial, LLC.
Melissa E. Sydney | Attorney at Law & Partner | Tarlow, Breed, Hart & Rodgers P.C.
Melissa is known as a trusted advisor to both families and individuals. Melissa carefully guides high net worth people through the estate planning and estate administration process. Handling matters both in the United States and internationally, Melissa creates sophisticated and tax-efficient estate plans for her clients. Her counsel includes multigenerational wealth transfers, business succession planning, charitable planning, gift and income tax planning, nuptial agreements and general probate and estate administration.
Contact Melissa at: msydney@tbhr-law.com
Aviva Sapers | President & CEO
Aviva E. Sapers is leading Sapers & Wallack in its third generation as President and CEO.
Her passion and outstanding expertise, dedication and true caring for her clients and her team earned the company a recognition on the Boston Business Journal’s list of the “Area’s Largest Women Run Businesses” in 2008.
Aviva received degrees of Chartered Life Underwriter and Chartered Financial Consultant from The American College, has her Certification in Long Term Care and is a licensed Insurance Advisor. She is a member of The Million Dollar Round Table’s Court of Table and The Association of Advanced Life Underwriters and NALU.
Contact Aviva at: asapers@sapers-wallack.com