Estate and Gift Tax Planning Discussion Points For 2024

1. Increase in the estate tax, generation-skipping tax and gift tax exemptions to $13,610,000 for 2024. However, beginning January 1, 2024 the exemption will sunset and be decreased to approximately $6.4 million per person.
2. The top rates for estate taxes, gift taxes, and generation-skipping taxes is 40% for 2024.
3. 18 states currently impose estate or inheritance taxes or both.
4. Ability of the estate of a taxpayer who dies in 2024 and files an estate tax return to allow the surviving spouse to use the deceased’s unused 13.61 MM estate tax exemption – “Portability.”
5. Why Clients Should Avoid “I Love You Wills” and Continue to Use By-Pass Trusts:
   
   (a) Exclusion of appreciation in value of assets between first and second death from future estate tax; (b) asset protection for assets from surviving spouse’s creditors; ( c) protection for assets from spouse remarrying; ( d) preserve intended distribution of first spouse to di e’s assets; ( e) protection from estate tax if exemption decreases; (f) protection from increases in estate tax rate and changes in the portability rules after 2024; and (g) cut off statute of limitations for audit of first spouse to die’s 706 estate tax return.
6. Why outright and leveraged gifting in 2024 makes sense – use the $13.61MM gift tax exemption before it is reduced and remove future appreciation and income from the donor’s estate.
   
7. How to best use the $13.61MM Gift Tax Exemption in 2024 and shift future appreciation in assets to the next generation and further with “zero rate” estate tax planning:
   a) Leveraged and discounted gifts of fractional interests in family limited partnerships and limited liability companies, real estate, and other closely held businesses.
   b) Dynasty Trusts
   c) Irrevocable Life Insurance Trusts (“ILIT”)
   d) Spousal Access Trusts (“SLAT”)
   e) Domestic Asset Protection Trusts (“DAPT”)
   f) Qualified Personal Residence Trusts (“QPRT”)
   g) Grantor Retained Annuity Trusts (“GRAT”)
   h) Installment Sales to Defective Grantor Trusts (“IDGT”)
   i) Charitable Lead Annuity Trusts (“CLAT”)
8. All estate plans with tax formula asset allocation clauses tied to estate tax exemptions (both state and federal) need to be reviewed to avoid possible misallocation of assets among family members.
9. The IRS has proposed eliminating fractional interest valuation discounts for family limited partnerships and limited liability companies, real estate, and other closely held businesses. It also has proposed prohibiting short term GRATs (2 years or less).
10. Plan now- before exemptions are reduced and planning techniques are limited or eliminated.

For a list of questions to ask yourself or your clients to determine the need for a business succession plan contact Jeffrey M. Manley at: jmanley@maypotenza.com or at 602.774.3505.