3-15-2022 Death & Taxes (How to avoid at least one of them)

Many property owners may be surprised to realize that, even with a moderately healthy return of approximately 7 percent annually, your net worth could easily double in ten to twelve years! However, without proper planning Uncle Sam can demand a hefty chunk.

Currently, the estate tax exemption is $12.06 million per person in 2022 (which covers a substantial amount of real estate assets) but is scheduled in 2025 to automatically be reduced.

This reset will return the estate and gift tax exemption amount to $5 million, as it was in 2016 (though it will be indexed for inflation, resulting in an exemption amount of approximately $6.6 million in 2026).

If the estate tax exemption amount is halved in 2026 and increases only with inflation at a historic rate of approximately 2.5 percent per year, clients could very quickly find themselves at risk of paying significant estate taxes (currently at a 40 percent rate) if they are still in the mindset of having a $12.06 million estate tax exemption ($24.1 million for married couples) available when they pass away in the next one to two decades.

Let’s talk about techniques to reduce these potential taxes from become a reality for your estate.

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