Do you have a 2024 resolution? Have you thought through this year’s goals and priorities? The best place to start could be a place you hadn’t considered: estate planning. Time and time again, we speak with clients and prospective clients that put off estate planning for the “later” stages of their lives. Because their circumstances do not vary much from year to year, they say, there is no reason to spend the time and resources engaging in estate planning now when they could just start later.
We always dissuade our clients from thinking this way. To state the obvious, we never know what’s around the corner. With no way of predicting the future, the best tool we have to ensure that our wishes are respected in the long-term future is making a thorough estate plan as soon as possible. Below, we detail several reasons why now is the best time to start (or continue) your estate planning journey.
Tax Exemptions in 2026
The federal government is gearing up to significantly alter how it handles certain kinds of tax exemptions. For example, did you know that the gift and estate tax exemptions will all be cut in half in 2026? The lifetime gift tax exemption was $11.58 million in 2020, increased to $12.92 million in 2023, and is now scheduled to decrease to $6 million in 2026. As for the estate tax exemption, it currently sits at $12.92 million per person. In 2026, the exemption is scheduled to decrease to roughly $7 million.
These exemptions can have major implications for those trying to pass on assets to their heirs and loved ones. This means that if you want to do more in 2024 and 2025 to pass on gifts to loved ones, 2024 is the time to put plans into action. By waiting until the end of 2025, you risk missing out on a major tax benefit that will be substantially less beneficial within the next two years.
Inflation
Inflation has been significantly affecting our clients for the past several years, and it is important to keep this in mind when estate planning. For example, because the yearly gift tax has consistently been on the rise, it might be more feasible now for you to increase your yearly gifts to your loved ones in a way that was not possible several years ago. In 2024, the yearly gift tax sits at $18,000 per individual per year or $36,000 per married couple per year. Annual gifting is one way our clients move wealth across generations over longer periods of time, benefiting both themselves and their heirs in the process.
Even if you do not consider yourself to be a high-net-worth individual, changes in inflation will affect your estate plans. Inflation affects everything from property costs to retirement plans to the values of debts that you hold. By neglecting to account for inflation in your estate plans or by not revisiting your estate plan regularly, you may be missing out on an opportunity to properly account for changes in the national and local economies.
Circumstantial Changes
The list of possible circumstantial changes in a client’s life is immeasurable. Has one of your children gotten married? Has anyone gone through a divorce (or is anyone planning on pursuing a divorce)? Has there been a recent incapacity, or is there an illness in the family? These are all things to think about – even if none of these changes have taken a toll on you and your loved ones, it is worth your while to plan as if any of these events could happen at any time. By starting your estate plan now, instead of when you are in crisis mode, you can give yourself the best chance of financially succeeding through these difficult times.
Communication with Loved Ones
Estate planning is also a great way to make sure you are talking with those who will be affected by your plans in the future. It is beneficial to make sure those that will inherit from your will, as well as those that will be responsible for executing your will, have copies of all of the relevant documents and records. Having discussions about how your assets will be distributed allows for less confusion your estate plan, which in turn allows your loved ones to execute your plans efficiently. We always encourage our clients to communicate with their loved ones early and often regarding their plans, to make sure any possible bumps in the road can be addressed before they become insurmountable hurdles.
Where Do I Start?
Estate planning can be stressful, and oftentimes, taking the first step is the hardest part. If you do not know where to begin, contact a qualified estate planning attorney to set up an initial meeting. Go to your meeting prepared with questions about how factors like inflation and tax exemptions might affect your individual circumstances. At the end of the day, everyone is different, and everyone’s estate plan will necessarily be different. By finding an attorney that can tailor your plan to your priorities, you can make sure you look out for your own interests and the interests of your loved ones in the long-term future – and what better goal could you set as we ring in 2024?
Are You in Need of a Team of Estate Planning Attorneys in Colorado?
At Braverman Law Group, we specialize in wills, trust, and estates for clients in Colorado. Our team is proud to create thoughtful, detail-oriented estate plans for those that seek our services, so that our clients can do everything in their power to set their loved one up for financial success in the future. If you would like a free and confidential consultation with a member of our team, give us a call today at 303-800-1588. You can also fill out our online form to contact us and have an attorney reach back out to you as soon as possible about your estate plans.