Estate planning is a topic that often sits on the back burner for many individuals, yet changes in the legal landscape can significantly impact one’s financial legacy.
For 2024, some noteworthy alterations in estate planning laws necessitate attention.
IRS estate and gift tax exclusion: Adjustments afoot
The Internal Revenue Service regularly revisits its estate and gift tax exclusion limits. 2024 is no exception. The exclusion amount, which shields an individual’s estate from federal taxes, has increased. For California residents, this means a greater ability to pass on wealth to their heirs without incurring hefty tax burdens.
Previously, the IRS estate tax exclusion stood at $12.92 million, shielding estates up to this value from federal taxation. In 2024, this exclusion will rise to $13.61 million, affording individuals an even more favorable climate for estate planning. Now, Californians can safeguard a greater portion of their assets from the clutches of federal estate taxes.
Rise in annual gift tax exemption: Generosity rewarded
In tandem with the shift in the estate tax exclusion, the annual gift tax exemption has also experienced an uptick. The gift tax exemption permits individuals to make financial gifts to others without triggering tax implications. This annual allowance serves as a valuable tool for those looking to pass on assets during their lifetime.
Previously capped at $17,000 per recipient, the annual gift tax exemption will rise to $18,000 in 2024. Californians can now bestow a more substantial sum each year, contributing to the financial well-being of their loved ones without invoking gift tax liabilities. This change encourages a culture of financial generosity, fostering the intergenerational transfer of wealth.
With new changes to estate planning laws, California residents have newfound opportunities to protect their assets and support their heirs.