ESTATE PLANNING ISN’T the cheeriest of topics, but it’s one where a little care can help your family immensely—and some carelessness could cost them dearly. Here’s a look at some of the latest developments:
- The federal estate tax exclusion is $12.92 million in 2023 and $13.61 million in 2024. In 2021, just 2,584 estate tax returns were filed that included the payment of federal taxes. That year, there were 3.5 million deaths in the U.S.
- As of 2023, 17 states and the District of Columbia have either a state inheritance tax or a state estate tax, and one has both. You can find a list at sites such as McGuireWoods.com, Nolo.com and TaxFoundation.org.
- In 2019, Congress eliminated the “stretch IRA,” which had allowed beneficiaries to draw down inherited retirement accounts over their lifetime. Instead, if an account is bequeathed by someone who dies after 2019, the beneficiaries must typically empty the account within 10 years.
- The gift-tax exclusion is $17,000 in 2023 and $18,000 in 2024.
- According to a 2023 survey for Caring.com, just 34% of U.S. adults have a will.
- In recent years, fewer households have received a tax break for their charitable contributions, because their itemized deductions were less than the new, higher standard deduction introduced by 2017’s tax law. What to do? Consider bunching two or three years of charitable contributions into a single year, perhaps putting the money in a donor advised fund.
- Individuals account for 64% of all charitable gifts, followed by foundations (21%), bequests (9%) and corporations (6%), according to Giving USA.
- Are you in your 70s or older and interested in making charitable gifts? Qualified charitable distributions from an IRA were made a permanent part of the tax code at year-end 2015—and have become more attractive, thanks to the 2017 tax law, which boosted the standard deduction while curtailing itemized deductions.
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