How To Plan Now For The Higher 2023 Estate, Gift, And GST Exemptions
What does that mean for your estate planning?
1. Review Your Current Plan: Start by reviewing your current estate plan. Do you have a trust? Is it revocable or irrevocable? Is it funded? What assets are in the trust? How is the trust titled?
2. Consider Using Gift Exemptions: Consider taking advantage of the higher gift tax exemptions before 2023. You can give up to $11,700,000 in 2020 and 2021 and $11,580,000 in 2022. You can use this to reduce your estate tax burden and give gifts during your lifetime.
3. Consider Using Gift Exemptions: Consider taking advantage of the higher gift tax exemptions before 2023. You can give up to $11,700,000 in 2020 and 2021 and $11,580,000 in 2022. You can use this to reduce your estate tax burden and give gifts during your lifetime.
4. Consider Using Gift Exemptions: Consider taking advantage of the higher gift tax exemptions before 2023. You can give up to $11,700,000 in 2020 and 2021 and $11,580,000 in 2022. You can use this to reduce your estate tax burden and give gifts during your lifetime.
5. Consider Portability: Portability allows a surviving spouse to use the unused portion of their deceased spouse’s exemption. This could be a helpful tool if you are married.
2023 Updates and the Urgent Need to Utilize Exemptions
1. Review Your Estate Plan: Make sure your estate plan is up-to-date and accounts for the new exemptions. Consider whether any changes should be made to your plan to ensure that your estate is administered in the most tax-efficient manner possible.
2. Move Assets Now: Depending on your situation, you may want to consider transferring assets now to take advantage of the higher exemption amount. You can transfer assets to trusts, children, or other family members.
3. Make Gifts Now: Make sure to take advantage of the higher exemption limits before they expire. Consider making gifts of cash or other assets to children, grandchildren, or other beneficiaries.
4. Consider Distributing Assets from GST-Exempt Trusts: If you have a GST-exempt trust, consider distributing assets from the trust now to take advantage of the higher exemption amount.
5. Review Beneficiary Designations: Make sure all beneficiary designations are up-to-date to ensure that the assets are passed to the intended beneficiaries.
6. Consult an Attorney: If you have any questions about the new exemption limits or how they may affect your estate plan, consult an experienced estate planning attorney.
Keep on Planning
1. Keep track of your estate planning progress: Maintain an up-to-date estate plan, including any changes to the law that may affect your estate. This will help you stay ahead of the possible changes to the higher 2023 estate, gift, and GST exemptions.
2. Talk with your financial advisors: Ensure that you have an understanding of the potential tax implications of any estate planning decisions that may be affected by the new exemptions. Your Columbus, Ohio, financial advisors can provide valuable insight and knowledge to help you make the best decisions for your estate plan.
3. Make sure your assets are properly titled: Make sure that your assets are properly titled to maximize your estate planning goals. Titling assets properly can help you take advantage of the new exemptions when they are implemented.
4. Consider ways to minimize taxes: Consider ways to minimize taxes on your estate by making gifts before the exemption changes take effect. This may allow you to reduce the size of your taxable estate.
5. Review your estate plan regularly: Make sure to review your estate plan regularly with your financial advisors to ensure that it is up-to-date and in compliance with the law. This will help you take advantage of the new exemptions when they are implemented.
Exemption Inflation Increases Impact Estate Planning
1. Review your current estate plan. Review your current estate plan to ensure that your wishes are still relevant and that you have taken advantage of the current estate and gift tax exemptions. Consider making any necessary changes to ensure that you are maximizing your exemptions and minimizing potential taxes.
2. Take advantage of the current estate and gift tax exemptions. Take advantage of the current estate and gift tax exemptions available to you. Consider gifting assets to family members or setting up trusts to take advantage of the exemptions. You may also want to consider making charitable contributions to reduce your taxable estate.
3. Update beneficiary designations. Make sure that all of your beneficiary designations are up to date. This includes retirement accounts, life insurance policies, and other accounts that require beneficiary designations.
4. Consider setting up an irrevocable trust. An irrevocable trust can be an effective estate planning tool to help minimize estate and gift taxes. Consider setting up an irrevocable trust to take advantage of the current exemptions and to prepare for the higher 2023 exemptions.
5. Consider a GST exemption trust. A GST exemption trust can provide an additional layer of protection from estate and gift taxes.
How to Make Those Gifts Now
1. Make outright gifts. If you plan to make gifts and want to take advantage of the higher exemptions in 2023, consider making gifts now. By transferring money or property now, you can use the current exemption limits and maximize the amount that can pass tax-free.
2. Consider gifting through trusts. Trusts offer a way to make large gifts now and still provide control over how the money is used. You can establish a trust now and transfer assets to the trust. The assets will remain in the trust and be managed by the trustee. The trust can also provide tax advantages for your heirs since the assets will generally pass to them free of the estate tax.
3. Make gifts of appreciated assets. If you own assets that have appreciated, consider gifting those assets now. By gifting the assets now, you can take advantage of the current exemptions and pass the assets to your heirs with a lower tax burden.
4. Create a Charitable Lead Trust. A Columbus Charitable Lead Trust (CLT) is a special type of trust that allows you to make a gift to charity while retaining control over the assets. You can establish a CLT now and transfer assets to the trust.
Examples of Different Types of Gifts Using Your Exemption
1. Cash Gifts – Cash gifts are a simple way to use your exemption. You can give up the annual exclusion amount of $15,000 to any individual without filing a gift tax return.
2. Real Estate – You can use your exemption to transfer real estate to an individual. This could include a primary residence, vacation home, or rental property.
3. Stocks and Securities – You can use your exemption to give stocks and securities to an individual. This could include stocks, bonds, mutual funds, and other investment products.
4. Life Insurance – You can use your exemption to give a life insurance policy to an individual. This could include a term or permanent policy.
5. Business Interests – You can use your exemption to give a business interest to an individual. This could include a partnership, corporation, limited liability company, or other business entity.
6. Personal Property – You can use your exemption to give tangible personal property to an individual. This could include artwork, antiques, jewelry, vehicles, and other items.
7. Charitable Gifts – You can use your exemption to make charitable gifts to an organization. This could include cash donations, stocks, real estate, and other gifts.
Special Limitations on Certain Planning Techniques
1. Utilize the annual exclusion. The annual exclusion is currently $15,000 per individual per recipient per year. This means that an individual can gift up to $15,000 to an individual in 2021 without incurring any gift tax.
2. Maximize portfolio diversification. Diversification of investments can help to minimize potential losses in the event of a market downturn.
3. Make sure to use the unified credit when making gifts to family members. The unified credit is currently $11.7 million and is expected to increase to $11.7 million in 2023. This means that an individual can make gifts up to $11.7 million without owing any gift tax.
4. Consider using a trust to make gifts to family members. A trust set up in Downtown Columbus, Ohio can help to protect assets from creditors and can also provide a tax-efficient way to transfer assets to family members.
5. Take advantage of the GST exemption. The GST exemption is currently $5.49 million and is expected to increase to $11.7 million in 2023. This means that an individual can make transfers up to $11.7 million without owing any GST taxes.
6. Consider using a bypass trust.
Conclusion
The higher 2023 estate, gift, and GST exemptions are just around the corner. Everyone needs to start planning for these changes now to ensure that their estate plans are in order and that as much of their assets as possible are protected from taxes.
First and foremost, individuals in Columbus, OH, should review their existing estate plans and determine what changes, if any, may need to be made to accommodate the higher exemption amounts. This should include making sure that wills, trusts, and other estate planning documents are up-to-date and accurately reflect the new limits.
Next, individuals should consider making gifts to family members and other beneficiaries now to take advantage of the higher exemptions in advance. This could include gifting cash, investments, real estate, or other assets. It’s important to note that these gifts must be structured properly to ensure they are not subject to gift or estate taxes. Finally, individuals should review their current estate plan and consider the potential use of the generation-skipping transfer (GST) tax exemption. GST tax exemptions are a valuable tool for transferring assets to future generations without incurring additional taxes.