No one really wants to think about paying taxes, but taking steps today may help reduce the amount of taxes you or your heirs may pay later.
A lot has changed in recent years regarding estate taxes. Depending on your situation, these changes could affect how much you leave as a legacy. That's why it's important to review your strategy regularly.
When it comes to making these decisions, we believe a team approach is best. Your financial advisor can work with you and your legal and tax professionals to help ensure your strategy reflects your current wishes as well as current tax laws.
Below are some highlights of current federal tax laws that are important to know if you are concerned about the taxes your estate could pay. Along with federal taxes, some states have their own estate or inheritance taxes. So while your estate may not be subject to federal estate tax, your estate or heirs may be subject to state taxes upon your passing.
The federal estate tax exclusion amount for 2024 is set at $12.92 million (adjusted for inflation annually) for all individuals. That means you may be able to pass an amount up to $13.61 million at death ($27.22 million for a married couple) free from federal estate tax.
The gift tax exclusion is coupled with the estate tax exclusion, so it’s also $13.61 million for 2024. Therefore, you may be able to gift up to $13.61 million during your lifetime free from federal gift tax. It’s important to remember, though, that any gifts made during your lifetime will reduce your estate tax exclusion amount dollar for dollar.
“Portability” for married couples
Portability means that when a person dies, the surviving spouse may “retain” the deceased spouse’s unused exclusion amount. For instance, if one spouse dies, the surviving spouse may be able to use their full combined $27.22 million exclusion without planning for it in advance. There are certain tax-filing requirements that must be satisfied to take advantage of this option, so you should talk with your estate-planning attorney or qualified tax advisor about your situation.
Depending on your assets and situation, your estate may or may not have a tax issue. If needed, however, there are strategies you can put into place that may help minimize the effects of these taxes.
But taxes are only one reason you should create an estate and legacy plan – having a strategy is about much more than money. Think about the things that are most important to you: your family, your children, charities, your business. A properly planned estate strategy gives you control over how to provide for these, both financially and personally, once you are no longer able to do so yourself.
More questions? Contact your financial advisor
Take the time now to talk with your Edward Jones financial advisor about how you can work together with your team of professionals. Taking the time to review your plan can better ensure your strategy is aligned with your current goals.
Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.