Scheduled Significant Limitation of the Federal Unified Gift and Estate Tax Exemption
A significant reduction of the Federal Unified Gift and Estate Tax Exemption is scheduled to take effect on 1/1/26.
What You Need to Know
Federal Lifetime Gift & Estate Tax Estimated Exemption (Individual)*
*The scheduled change would take effect on 1/1/26. This assumes inaction by Congress between now and then, including after the 2024 election cycle. The timeline could change including possible acceleration by Congress or the President.
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A Monumental Change Affecting Many
Given the significant anticipated reduction to the gift and estate tax exemptions, taxpayers are encouraged to revisit their current estate plans and explore gifting opportunities in advance of the deadline. Inaction risks the possibility of losing a once in a lifetime opportunity to shift significant wealth out of an individual’s taxable estate and allow those assets to continue to appreciate.
This scheduled change may affect many individuals and couples, including business owners and those owning real estate.
In November of 2017, Congress passed the Tax Cuts and Jobs Act and increased the federal unified gift and estate tax exemption from $5.49 million to $11.18 million and provided that the exemption would be adjusted annually for inflation. The 2024 lifetime exemption is $13.61 million, adjusted for inflation. Currently, the federal exemption will return to pre-2018 amounts of ~$6.5 million adjusted for inflation effective January 1,2026. This timeframe assumes inaction by Congress to accelerate a change.
Why Think About This Now?
While the end of 2025 seems like a long way off, the reality is that time goes by quickly.
It is important to note that any changes must be complete PRIOR to 1/1/26.
Paperwork to transfer assets must be done, not in process.
An Overview of the Process
Important note: the documentation required to implement the plan can take time.
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Call us at 781-235-5500 , email us or contact one of our trust and estate attorneys in our Private Client Services practice to schedule a meeting. We look forward to assisting you in strategizing, planning and implementing a plan to take advantage of the current gift and estate tax lifetime exemptions before they could be dramatically reduced.