Estate and Gift Tax Planning and the TCJA

It is somewhat unusual to highlight 2026 taxes in 2024, but we are in an unusual situation: Many of the provisions in the 2017 Tax Cuts and Jobs Act (TCJA) will expire at the end of 2025 unless Congress acts to extend them. Taxpayers need to be aware of how they will be affected so they can be prepared, especially when it comes to estate and gift taxes.

The TCJA effectively doubled the estate and gift tax basic exclusion amount from $5,490,000 in 2017 to $11,180,000, adjusted each subsequent year for inflation. For 2024, the exclusion amount is $13.61 million per person ($27.22 million for a married couple). This increase means that a married couple can shield a total of $27.22 million without having to pay any federal estate or gift tax. Taxpayers who die with a taxable estate greater than the exclusion amount may be subject to both federal estate tax and state estate tax.

This may all change, however, on Jan. 1, 2026, when the provision that nearly doubled the exclusion expires. The provision may be extended, may go back to $5,490,000 (adjusted for inflation) or may be revised to some other amount. Taxpayers should take this opportunity to consult with their estate planning attorneys and their financial advisors to discuss whether and how  they should adjust their estate plans. These options include the following.

Charitable giving

Making donations of appreciated assets to charity may allow taxpayers to avoid capital gains taxes and even receive a tax deduction. The potential change in tax rates may impact when such gifts should be made as well as the vehicle that is used.

Using trusts to shield assets

Spousal lifetime access trusts and grantor retained annuity trusts are two examples of irrevocable trusts that may shield assets from estate taxes. Both trusts provide the grantor the ability to gain indirect access to the assets using either income distributions (SLATs) or annuity payments (GRATs). Credit shelter trusts are another example of an estate planning trust. With a CST, when the first spouse dies, a portion of their assets are placed in the trust and passes to beneficiaries when the second spouse dies. The assets and their appreciation are sheltered from estate taxes when the second spouse dies.

It is important to plan for inevitable changes to the TCJA’s provisions with your estate planning attorney and financial advisor. With their help, you can maximize your tax exclusion.

Do you have questions?

Count on your experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us at info@esmlaw.com. 

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