New Year, New Thresholds for Estate Planning

Tax Benefits and Savings Opportunities

Each new year, the federal gift and estate tax exemption is adjusted based on inflation. For 2024, the exemption increased from $12,920,000 per individual to $13,610,000 per individual.  A married couple can give up to $27,220,000 to children and others tax free.   

An individual also can take advantage of the annual gift tax exclusion when making gifts to persons other than spouses without using up any of the federal gift and estate tax exemption.  In 2024, the annual exclusion amount was raised from $17,000 per recipient to $18,000 per recipient.  For example, one person can make an $18,000 gift to three different people for a total of $54,000 without incurring a gift tax or using part of the federal gift and estate tax exemption. 

Note – most gifts to spouses are not subject to any gift and estate tax and do not use up the exemption. The main exception to this policy is a gift to a spouse who is not a U.S. Citizen. In that situation, the annual exclusion from gift tax is $185,000 in 2024, up from $175,000 in 2023.  



Tax-Deferred Savings Plans

For many people, a large portion of savings is done through deferred-tax accounts such as IRAs and 401(k) accounts.  The new year brings a cost-of-living increase in contribution limits for 401(k), 403(b), Thrift Savings Plans, and IRAs.

For many people, a large portion of savings is done through deferred-tax accounts such as IRAs and 401(k) accounts.  The new year brings a cost-of-living increase in contribution limits for 401(k), 403(b), Thrift Savings Plans, and IRAs.


401k, 403(b), and Thrift Savings Plans:      

  • standard contribution                                                      $23,000
  • catch-up contribution for workers over age 50               $ 7,500

IRAs

  • standard contribution                                                      $  7,000
  • catch-up contribution for workers over 50                    $  1,000 (no change)

January is a wonderful time to revisit your long-term savings strategy and your estate plan.  Make sure that your beneficiary designations on your investment and cash accounts are completed.  Make sure your tax-deferred accounts are funded to best meet your savings goals.  Finally, review your will or trust to ensure that it most effectively protects you and your family given the changes in your life, and the changes in our economy.

At Braun & Gresham, our estate planners are ready to help you review and update your estate plan. For more information or to schedule a consultation, please contact us at (512) 894-5426 or email [email protected].

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