Issue link: https://info.seic.com/i/1541793
3 Estate and gift tax. We now know that estate and gift tax laws are permanent with no scheduled sunset. There is no new wealth tax on unrealized gains. Rather, the current exemption for 2025 remains in place, and starting in 2026, the federal estate and gift tax and generation-skipping tax exemptions increase to $15 million per person, $30 million per married couple, inflation adjusted. WH AT IT M E A N S There is some certainty for those at or approaching taxable estates. Smaller estates can focus on income tax planning and techniques to preserve step-up in basis at death. Leveraging annual exclusion gifts, $19,000 per person for 2025, will help achieve estate tax-free growth at all wealth levels. High-net-worth families continue to benefit from meaningful estate planning and multigenerational wealth transfer opportunities. Popular estate freeze techniques are more relevant than ever. Some of these include: • Grantor retained annuity trusts (GRATs). GRATs can provide tax-free gifting for beneficiaries along with cash flow in the form of annuities back to the grantor. • Spousal lifetime access trusts (SLATs). SLATs allow married couples to make efficient use of the lifetime gift-tax exemption while retaining access to income and principal if the need arises. • Reverse qualified terminal interest property (QTIP) election. This complex technique, if properly built into a married couple's estate plan, can minimize exposure to estate tax and give a step-up in income tax basis at both first and second deaths. Gift planning is particularly powerful for taxpayers residing in the District of Columbia or one of the 17 states that maintain separate death taxes. Be aware that certain states, most notably California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington, continue to look at expansions to their estate tax laws. Finally, keep an eye on the adjusting interest rates as the Federal Reserve continues to battle inflation. Interest rates are key factors in the gifting process. $19,000 per person for 2025, will help achieve estate tax-free growth at all wealth levels.