ESTATE PLANNING STRATEGIES FOR 2023
THOUGHT LEADERSHIP PERSPECTIVES
BY MARIANNE INFORZATO, CFP®
THIS COULD BE AN OPPORTUNE TIME TO CONSIDER TRANSFERRING WEALTH TO FUTURE GENERATIONS—BY TRANSFERRING ASSETS (AT LOWER VALUES) PRIOR TO SCHEDULED LAW CHANGES.
As the world continues to face uncertainty, we at Fairman Group Family Office want you to know that we are available to help you with all your financial planning needs. One important area that may be on your mind is estate planning—and specifically, having an updated and comprehensive estate plan in place. Below are our top suggestions for estate planning strategies in 2023:
Review and Update Your Estate Plans To Be Sure They Reflect Your Intentions.
Estate documents (wills, revocable trusts, powers of attorney…etc.) are important to ensure your property is distributed according to your wishes in a tax-efficient manner. If you do not currently have estate documents, we have the expertise here at Fairman Group to assist you in designing a plan and can also help you find a qualified estate planning attorney to draft the documents.
Gift Assets Now To Maximize the Power of These Exclusions.
During 2023, donors can gift $17,000 per person ($34,000 for married couples). The annual exclusions are projected to increase to $18,000 for 2024 and $19,000 for 2025, subject to the final inflation calculations.
In addition, over one’s lifetime, taxpayers can gift up to $12.92 million per person ($25.84 million for married couples) without paying gift tax. As the asset’s value grows, the growth will be outside of the donor’s estate and thus not subject to estate tax at the donor’s death. Removing assets from the estate at today’s values is a very powerful tool in minimizing estate tax.
Even if you have previously used your lifetime exemption, there is a yearly inflation adjustment that can be used for additional gifts without paying gift tax. The adjustment for inflation from 2022 to 2023 alone is $860,000 ($1.72 million for married couples). The adjustment for inflation from 2023 to 2024 is projected to be around $690,000 per person ($1.38 million for married couples).
Take Action Sooner Rather Than Later.
Keep in mind that the above-mentioned Estate and Gift exemption amounts are scheduled to sunset at the end of 2025. At that time, the exemption amount will be cut in half. 2025 will be here before we know it. Taking action now will ensure we can assist you in developing a proactive plan and allow for its timely implementation with a qualified estate attorney.