When investors were granted extraordinarily high estate tax exemptions in 2017, the law was crafted in a way that allows these exemptions to expire, reverting to pre-2017 levels. High-net-worth individuals and families should consider whether it makes sense to maximize their lifetime gifts before the exemption changes to approximately $7 million in 2026. Any difference between the current $13.61 million exemption and the reduced amounts after 2025 will be lost if not utilized.
This change could potentially subject many more people to estate tax situations, especially those who are relatively young and not likely to pass away soon, providing ample time for their assets to continue growing. When investors review their assets, they typically consider their homes, retirement accounts, investments, businesses, and more. However, personally owned life insurance policies with a cash value should also be regarded as assets.
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