Maximizing Year-End Tax Planning with Your Estate

Now that the end of the year is quickly approaching and it’s a good reminder to set up a meeting with your CPA or estate planning attorney to discuss any major changes in your life this year. Getting these changes documented or a strategy in place before the end of the year can give you peace of mind and ensures that it doesn’t slip from your to-do list. This is a strategic opportunity to review your estate planning and your wealth planning strategies, whether you’re unsure about what to do with surplus wealth, hoping to give more in the new year, planning a business transition, or concerned about making gifts to leverage benefits, now is a good time to schedule these conversations. You can take advantage of a lifetime exemption of $12.92 million to protect transfers of money from gift and estate tax. Otherwise, the tax rate for these transfers is 40%.

If you’re a married couple, this exemption doubles to $25.84 million. Making gifts during your lifetime can help eliminate the future appreciation of these assets from your taxable estate while also supporting your loved ones.

You can also take advantage of the annual exclusion of gifting up to $17,000 annually to another person without impacting their lifetime exemption. This amount increases to $34,000 for married couples and is anticipated to rise to 18,000 for individuals and 36,000 for couples in 2024. These gifts can be made directly into custodial accounts, 529 college savings plans, or into trust. Communicating with your estate planning lawyer in Virginia about the best strategies for handling this is strongly recommended.