The New Year’s celebrations are over in New Jersey and many people’s thoughts are turning to tax season. There are many changes as a result of changes in the tax law that may prompt people to review their estate plans and tax strategies. It is a good idea to periodically review estate planning measures to ensure that the plan meets one’s goals while lowering the possible tax burden.
One of the biggest changes in the tax law and the one that has the biggest potential impact on estate plans is the change in the amount of the gift tax exemption. Many people, parents and grandparents in particular, enjoy being able to share their wealth with family and see the benefits of it while they are still living. The amount that can now be given as a gift has increased to $11.4 million per person or $22.8 million per couple.
One caveat is that this change is scheduled to end and revert back to prior levels on Jan. 1, 2026. That amount is $5 million which will be indexed for inflation. This change affords many people the opportunity to transfer wealth without incurring transfer or estate taxes. However, or now it’s a temporary window of opportunity.
People strive to build wealth to fund retirement and leave something behind for their loved ones in New Jersey. Having an appropriate tax strategy and taking advantage of current tax laws can help make those plans a reality. Tax law changes frequently and consulting with a professional versed in the tax law and estate planning can help one realize one’s long term financial goals.
