Estate Tax Case Analysis:
This case involves a couple 75 and 73 years of age who live in California. They have an estate currently valued at $7 million, and they want to improve their estate planning via a tax analysis.
Current Estate Tax Exemptions – They currently enjoy an $11.7M temporary exemption. It sunsets in 2025 and is supposed to return to the $5M indexed for inflation beginning in 2026. The clients’ life expectancy is beyond 2026 when the exemption is set to go down to the $5M indexed for inflation per individual (unless the law changes, of course).
The $5M indexed for inflation may mean that the exemption may be $8M per individual in 15 years. The tax exposure would be limited to $1,372,789.
With that being said, the estate tax exemption could go down to $3.5M with the current administration; this would increase the tax exposure and require an adjustment in the estate plan.
Armed with this information, our team can develop a strategy to address the estate tax exposure for this couple with the use of insurance, enhance their legacy capability and eliminate transfer stress on their heirs.