By Amy C. O’Hara, CELA

Ringing in the new year brings updated estate and gift tax exemption amounts for 2024.

The federal estate and gift tax exemption has now risen to $13.61 million per person, allowing married couples the advantage of portability, effectively safeguarding $27.22 million from estate taxes upon death. The tax rate for gifts and estates exceeding the exemption remains steady at 40 percent.

New York State has its own separate estate tax. As of January 1, 2024, the New York estate tax exclusion amount increased to $6.94 million. New York law does not recognize portability. Consequently, estate plans should incorporate credit shelter trusts to capitalize on the NYS exclusion amount following the demise of the first spouse. It’s important to recognize that the New York exclusion amount operates as a “cliff,” subjecting the entire estate to taxation if it surpasses 105 percent of the exclusion amount. While New York does not impose a gift tax, any gifts made within three years of a resident’s death are factored in when determining potential estate taxes.

The annual exclusion amount also increased from $17,000 to $18,000 starting January 1, 2024. In 2024, a person can gift $18,000 to an individual. In New York, annual exclusion gifts are exempt from the three-year inclusion rule.

Looking ahead, the current federal estate exemption amounts are set to expire on December 31, 2025. There is a likelihood of reduction to approximately $5 million adjusted for inflation unless proactive measures are taken by Congress to extend the current heightened federal exemptions. It is advisable to engage in discussions with an estate planning attorney to understand the potential implications of these changes.

At Littman Krooks, we can assist you with your estate planning and determining an estate plan that is best suited for you. Contact our office today if you are interested in learning more about the estate tax exemption and annual exclusion amounts.