Estate Planning You Must Know in 2024

Posted on September 3, 2023.

If you make a lifetime gift the Lifetime gift tax exclusion in 2023 is 12.92 million dollars.

To reduce your estate tax the estate tax exemption in 2023 is 12.92 million dollars.

You can consider this a coincidence because these are two different code sections making, how they work internally, quite different. Then you have the Congress that may tinker with one and not the other. The Congress could set new upper limits for both and both could be very different, normally the estate tax exemption will be Higer and the lifetime gift tax exclusion will be the lower number.

Annually every taxpayer is allowed to have the annual gift tax exclusion in 2023 is $17,000.

One has to become familiar with these terms

  • Lifetime gift tax exclusion
  • Estate tax exemption
  • Annual gift tax exclusion

If you make a gift that exceeds the annual gift tax exclusion then you must file FORM 709, which is the Gift Tax Return. On this form you report the gift then apply your lifetime gift tax exclusion which often makes zero gift tax owing on the return that you mail in.

When you die then someone left behind has to file for you your final income tax return FORM 1040 and your estate tax return FORM 706 if you meet the requirements. You may want to volunteer to file the FORM 706 so that your spouse one day can use your unused estate tax exemption.

In order for the surviving spouse to pick up and use the unused exemption of the deceased spouse, the deceased spouse's estate has to file a federal estate tax return that makes an election to allow the surviving spouse to use that exemption.

The exclusion amounts are currently available until December 2025 for the federal gift and estate tax and generation-skipping transfer tax. Sometimes individually or collectively referred to as transfer taxes may prove to be a once-in-a-lifetime opportunity to pass significant wealth to children, grandchildren, and more distant generations in a tax-efficient manner.

It is speculated, though, IRS regulations will allow use of either the lifetime gift tax exclusion that applied when gifts are made or the exclusion amount applicable when the donor dies, whichever is greater. As a result, people who make large gifts before 2026 don't have to worry about losing the benefits of the higher gift tax exclusion amount after it's lowered.

Making a gift then removes the property from your estate. Now you just have to outlive the child that you gave the gift to!

If you keep the property and the beneficiary ends up with the property and the tax law changes to an estate tax exemption of $6 million then your estate will have to pay a 50% estate tax on all property that exceeds the $6 million.

If you make a gift then, the Donee (child) acquires the donors (person giving the gift) basis in the property. If there is a lot of appreciation already then children need to be advised of the potential for capital gains taxes owing by the child.

If you wait and the property passes to child through your estate the beneficiary’s basis then would be the fair market value at the time of death of the deceased person passing on the property to the child.

To properly weigh the costs involved in all of this is, the deceased persons estate would have to pay a 50% estate tax if the size of the estate was over the estate tax exemption amount in the year of death.

The solution may be to make the gift get the Lifetime gift tax exclusion to block the gift tax and then teach your children how to exchange the property for other real property if there was ever the time or reason to get rid of the gifted property.

Estate planners stay up late at night trying to see the future and help the client make the best choices now.

In closing if you ever give your child property it should be to a trust for the child.

Many people are scrambling and educating their adult children and they are planning to team with their spouse and give up to $26 million away as a gift tax free.


As you weed through the technical aspects of this article you will soon see that right not the gift tax exemption for you any your spouse is $26 million. Thus $26 million of property may be given away this year, tax free.

Many people see that the combines estate tax exemption of $26 million at the end of 2025 is going to be automatically reduced to around $14 million or less unless the Congress in 2025 can agree on something else.

People today in record numbers are planning to make gifts before the end of 2025 to avoid getting the property taxed at the 50% rate by the estate tax, the tax levied when you die.

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