Personalized Legal Services

Why you may need to do your estate planning like it’s 2026

On Behalf of | Jan 26, 2024 | Trust & Estate Planning

Estate planning is all about looking to the future. That means that you’ll want to not just develop an estate plan that considers current state and federal laws but also one that foresees planned changes to those laws.

You may be familiar with the Tax Cuts and Jobs Act (TCJA) that took effect at the start of 2018. Among the provisions in the law is one that significantly increased the value of an estate that is exempt from estate taxes (approximately $13.6 million for individuals and double that for married couples in 2024). But are you aware of this law’s sunset clause?

What does the sunset clause do?

Congress included a sunset clause in the TCJA. That means in 2026, this and other changes are set to end and go back to where they were in 2017.  The estate tax exemption level will drop by about half to under $6 million for individuals and double that for a married couple’s estate.

Assuming that you plan to hang around for at least another two years and have a sizable estate, it’s wise to start making any necessary changes to your estate plan accordingly. Otherwise, a significant portion of your assets will go to taxes rather than your beneficiaries. If you’re just starting your estate planning, it’s important to do it with an eye to these upcoming changes.

Protecting your assets from estate taxes

There are a number of ways that you can modify or set up your estate plan so that you can leave all of your assets to your loved ones and others while avoiding estate taxes. There are numerous types of trusts, for example, that protect assets from estate taxes.

You may also choose to gift assets to loved ones while you’re still around. This can cut down the value of your estate. It can also help you ensure that treasured assets like artwork, antiques and jewelry go to those who will most appreciate them and that you can leave monetary assets to the people and worthy causes you want to have them. Of course, you need to be careful that your annual gifts don’t exceed the value that would cause gift taxes to kick in.

By seeking experienced legal guidance as you develop or modify your estate plan, you can help to ensure that your plan won’t have to undergo constant changes with every new Congress and occupant of the White House. But, also, that it does reflect important adjustments in the law as necessary.