Estate and Gift Tax Unified Credit Increase for 2024

An Overview of Estate and Gift Taxes 

Estate and gift tax applies when an individual transfers assets (e.g., money, property) during life or at death that in the aggregate exceeds a certain threshold, referred to as the Basic Exclusion Amount (“BEA”), which is currently $13,610,000 in 2024. The BEA doubled in 2018 due to the 2017 Tax Cuts and Jobs Act (“TCJA”), increasing from approximately $5.5 million to $11 million and has since been indexed for inflation. However, this increase is only temporary. In 2026, the BEA is scheduled to revert to its pre-TCJA amount, as indexed for inflation, which will be around half of what it is today. It is noteworthy that some states also have an estate tax and/or inheritance tax with separate rules, while only Connecticut has its own gift tax.  

The Importance of Planning Now 

Now is the time to begin using the increased BEA before it shrinks to half of what it is.  Using it as part of a well thought out estate plan can preserve wealth for future generations, reduce a family’s eventual estate tax burden and permit an individual to control who receives their wealth and how it will be received, outright or in trust. Proper planning can also help reduce the likelihood of future disputes among family members. 

Things You Can do to Minimize Your Estate and Gift Tax  

• Use the annual gift tax exclusion ($18,000 per recipient in 2024). 
• Exhaust the current BEA. 
• Spend down assets. 
• Leverage the unlimited gift tax exclusion for tuition and medical expenses paid directly to a health care provider and educational institution. 
• Give cash or other assets to charities. 
• Create a gifting program outlining the timing and frequency of gifting. 
• Consider relocating to a state that does not have an estate or inheritance tax (e.g. Florida). 

Finally, it's important to work with experienced, qualified, and credentialed professionals to help design and implement an estate plan that meets your goals and objectives. Contact our team to discuss your unique situation and opportunities.