As control of the federal government changes, sometimes every two years, the tax laws often change as well. Recently, new tax laws have gone into effect, which may significantly affect many Texans’ management of their assets and estate. A recently released legal trade publication discusses some of the recent tax changes and how they may affect your estate planning.
The most significant changes to tax law that involves estate planning involve adjustment of the estate tax and the gift tax. As of 2023, the combined exemption amount from the gift and estate taxes has increased by nearly $ 1 million. With the new tax numbers, single persons are now entitled to give or pass on to their heirs up to $12,920,000 without incurring any estate or gift tax burden. A married couple can exempt $25,840,000 in this same manner.
This change may affect how some Texans construct and manage their estate because trusts, non-liquid holdings, and other financial measures may not be necessary to reduce the tax burden of your heirs upon your death. The exemption is the highest it has ever been and is set to reduce in 2026. With proper advice and counsel, Texans with significant assets may be able to arrange a “lifetime gift” to an heir, locking in the favorable tax exemption while it is part of the law.