The Tax Cuts and Jobs Act of 2017 (TCJA) is expected to significantly impact the estate planning outlook for 2024. The TCJA had previously increased the lifetime estate and gift tax exemption from $5.6 million to $11.18 million for individuals, adjusted annually for inflation since 2018. However, as we approach 2024, further adjustments are anticipated.
In 2023, the lifetime estate and gift tax exemption is predicted to be $12.92 million, or $25.84 million for married couples (ArentFox Schiff). Going forward, it is projected that in 2024, these figures will rise to $13.61 million for individuals and $27.22 million for married couples. These relatively high exemption levels offer a substantial planning and strategizing scope for individuals and families with hefty assets.
Notwithstanding the zenith in exemption rates, legal industry professionals should be mindful of the impending changes. The broadened exemption rates won’t last forever; they will revert to pre-TCJA levels after 2025 unless Congress decides to extend the provision. Therefore, a detailed understanding of the transfer tax landscape is crucial for professionals in law firms and corporations handling estate planning.
Adjustments in tax laws might introduce some surprises for corporate players and high net worth individuals. It would be prudent for professionals to stay abreast of these changes, to both anticipate and prepare for the financial implications for themselves and their clients. An accurate review of the potential changes can greatly assist in making informed decisions around future estate planning.
For a more detailed view of the 2024 estate planning outlook, please refer to ArentFox Schiff’s full report.