Estate planning can be extremely complex, especially when the tax rules and exceptions change each year. So, whether you are creating your first estate plan, or you simply want to ensure your current one is up-to-date, it is important to analyze your wills and/or trusts each year. One of the most important things you can do for your estate is choosing the right estate administration lawyer.
Not only do you need a skilled attorney to help you set up your initial plan, but you want to make sure you have an attorney who is dedicated to keeping up with the ever-changing estate tax laws to ensure that you are getting all the benefits available. The following highlights the most important changes coming in 2023. Contact your estate administration attorney to make sure that your estate plan is up-to-date.
What will the lifetime gift and estate tax exclusion be in 2023?
Tax laws allow estate owners to transfer parts of an estate to heirs, tax free. However, there are stipulations on this gift-giving, including a maximum lifetime amount, which is adjusted each year for inflation. In 2023, that amount will increase to $12.96 million. Remember that this allowance does not eliminate the need for wills and trusts; instead, consider it an additional tool or resource that may be used while creating your full estate plan.
Will there be a change to the annual exclusion next year?
Your annual exclusion—which does not go toward your lifetime amount—can be given to as many individuals as you wish. There are, however, caps on how much you can give each year. In 2023, that amount will increase to $17,000.
However, you may still make additional gifts on top of this amount to a spouse, who does not have an annual limit You may also give more than this limit for medical care or education needs of an heir, as long as the funds are transferred directly to the institution rather than the individual.
How do state laws impact estate planning?
Even though federal rules have become somewhat easier to understand and follow, they must still be cross-referenced with state laws. Some still have lifetime exclusion limits far lower than the current federal amount, which can complicate the estate planning process. Special techniques and guidance from an experienced estate planning attorney may be necessary for creating a plan that offers the best possible outcome for your heirs.
How often should I meet with my estate administration lawyer?
In order to make sure that your estate is not gobbled up by estate and inheritance taxes, choosing the right administration lawyer is key. Meeting with your attorney to review your current plan and make any changes based on new tax rules, as well as any life events or other changes your family may have had should be an annual event.