Happy Holidays: Considerations for Year-End 2023

The Holidays are upon us, and people are hustling to purchase last-minute Christmas gifts, wrapping presents, baking cookies, and trimming the tree. The year-end is fast approaching, and it is a time for both reflection on the past and looking ahead.  Hence, this is the Season when many people make plans. This means clients should be looking at their estate plans, financial strategies to reduce taxes, gifting, and taking advantage of the opportunities to lower their 2023 tax bill.

Clients ask me frequently what Congress will they allow the current federal law for estate planning to sunset?  The estate tax and individual tax provisions will expire in 2026 or sooner. I have no idea what this Congress will do and if there is anything I have learned over thirty years of practicing estate planning, is that change is inevitable, and we must prepare for the unexpected and the future.

If you have sufficient assets and if transferring wealth is a goal, take advantage of the gift tax annual exclusion rate.  You need to make these annual exclusion gifts now, before year-end. During this year an individual can gift up to $17,000 to as many people as they like without using your federal lifetime gift and estate tax exemption.  That $17k combines to $34,000 for married couples.  For planning purposes, the annual exclusion amount will increase to $18,000 or $36,000 for married couples in 2024.  But don’t wait, if this is in your lexicon do it this year or early in 2024.  Estate planners and I across the country think the possibility of this expiring sooner or our practices being overwhelmed at the last minute could happen.  

Consider funding 529 Plans for current or future grandchildren. You can pay tuition expenses and qualified medical expenses directly to a provider without creating a gift. Tuition includes the cost of education from preschool through graduate school but does not include room and board or books. Medical expenses can include medical premiums.  Giving gifts is a planning solution to decreasing the size of your estate while you are supporting your loved ones and the charities you support.

Look at your estate plan, has it been reviewed lately?  We recommend having a review if you have had a change in marital status, the birth of a child, a change in your assets or residency, or wish to change beneficiaries, guardians, executors, and or trustees.  Also, changes to State laws have occurred, so make sure you are up to date.  How about your children, have you asked yourself who would take care of your children if something happened to you? Having a guardian in place is the best gift you could give your minor children, so their personal and financial needs are met.  

For those clients who own small businesses, do not forget to file your reports on company ownership under the new law passed called CTFA, Corporate Transparency Act effective January 1, 2024.

Last, have you discussed your estate plan or goals with your family?  With family around, the Holidays are a good time to discuss your goals.  This makes it transparent which helps to ease the anxiety should something happen. Estate planning isn’t the most exciting of topics to discuss but it is necessary.

Thank you for letting us be a part of your estate planning journey and the relationships we have built together. We can’t wait to see what 2024 has in mind.  

Warm wishes for a Happy Holiday and a Prosperous, Healthy, and Peaceful New Year.

The Team at Altman & Associates, a Division of Frost Law.

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