Thanks to newly announced policies from the IRS, 2023 is shaping up to be a big year for estate planning. With several new opportunities for ultra-wealthy individuals to protect their assets, it is more important than ever to plan ahead and think about goals for the upcoming year. By planning, you can protect yourself from being double taxed and from facing penalties for failing to pay the required amounts.
In its recent press release, the IRS announced that it will implement several new policies that will allow ultra-wealthy individuals to protect more of their assets from taxes. The reason for the shift, according to tax law experts, is to account for annual adjustments in inflation. The reality, however, is that individuals that have been sitting with lower-value portfolios in 2022 can use the policies to their advantage and can begin developing more aggressive strategies heading into 2023.
One of the new policies will increase how much individuals can transfer to their heirs each year without being subject to federal taxes: in 2022, Americans could transfer $12.06 million, but next year the number will jump to $12.92 million. The IRS will also increase the limit on tax-free gifts next year, giving each individual a threshold of $17,000 per recipient instead of the current limit of $16,000.
It is possible that estate-tax exclusion will be a thing of the past in 2025. Unless Congress decides otherwise, the provision will be retired after two more years. This reality means that 2023 and 2024 will be pivotal for those looking to take advantage of what could be temporary higher limits.
Many experts call the estate tax the “cruelest” tax because, when paid, it can result in a double tax on an individual’s wealth. The reality is that many times, there are ways to avoid paying this tax altogether, but figuring out the strategy behind this possibility requires talking to an expert in the field. Not all estates are subject to the estate tax, but individuals can be subject to harsh penalties if they illegally or unknowingly avoid the tax altogether.
Estate planning is a complex subject, one that requires staying up to date on the landscape and keeping track of how the IRS taxes Americans differently each year. With 2023 just around the corner, the IRS’s newly announced policies are more important than ever.
Are You Looking for an Estate Planning Attorney in Houston?
If you have not yet consulted with an estate planning attorney, it is in your best interest to contact an experienced, comprehensive lawyer that can help you think through what’s ahead. At McColloch Miller, PLLC, we have been working for 40 years to help our clients achieve their goals. We pride ourselves on having developed a practice that centers on collaboration with our clients and prioritizing each person’s individualized needs. For your free, no-obligation initial consultation, give us a call today at 713-936-9073.