Lifetime Exclusion

The Tax Cuts and Jobs Act (TCJA) that passed in 2017 significantly impacted the federal estate and gifting landscape by nearly doubling the lifetime gift exemption from $5.5 million to $11.1 million (to be adjusted for inflation annually). Like many other aspects of the TCJA, this provision is set to expire on December 31, 2025.  The potential sunset of this provision could have wide-ranging implications for estate planning and wealth transfer strategies.

After adjusting for inflation, the 2024 exclusion limit currently stands at $13.61 million per person ($27.22 million per married couple). If Congress does not extend this TCJA provision, the lifetime exclusion limit will revert to the previous exclusion amount adjusted for inflation – approximately $7 million.  With the upcoming election and the potential passage of a new set of laws addressing this area by Congress in the months following the presidential election, there is a good deal of uncertainty surrounding this provision, and tax advisors will be closely monitoring the situation.

The current situation represents an important juncture for estate planning prior to the December 31, 2025 sunset date, where Individuals with estates in excess of $7 million should reach out to their estate attorneys and tax advisors to review estate plans currently in place and consider any adjustments that may be necessary to minimize the impact of these potential changes.

If you have any questions regarding these rules, please reach out to your representative with DKC.