• Annual gifting limit – the limit on tax-free gifts will be $18,000 in 2024, up from $17,000. These gifts do not count toward one’s lifetime gifting exclusion maximum and neither the giver nor the receiver is taxed. If one wants to help a child/grandchild with education, they can make a lump sum contribution to a 529 plan of up to five times the exclusion, or $90,000.  A married couple could set up a 529 plan for $180,000.

• As of October 1, 2023, the IRS started charging 8% interest on estimated tax underpayments, up from 3% previously.

• Due to inflation, the threshold for tax brackets will increase by 5.4% in 2024, the second largest increase in the past three decades.

• Gift/estate tax exclusion – in 2024 the gift/estate tax exclusion will increase to $13.61 million.  However, the current law has a sunset provision that will reduce the exemption to approximately $7 million beginning January 1, 2026.  Planning for a lower exemption is critical.  We encourage you to discuss your estate plan with your attorney and/or Inlet Private Wealth to strategize as there are several creative strategies that can be incorporated in your estate plan such as making sure your estate involves setting up a credit shelter trust and/or the utilization of other estate planning tactics such as grantor retained annuity trusts (GRATS), defective grantor trusts, spousal lifetime annuity trusts (SLATS), and the establishment of dynasty trusts for your family.

• The 2024 limit for 401(k) contributions has been increased to $23,000 for employees. If one is 50 years or older, they can contribute an additional $7,500 in catch-up contributions, raising the total employee contribution limit to $30,500 for 2024.

• The IRA contribution limit for 2024 has been increased to $7,000 for individuals under the age of 50 and to $8,000 for those age 50 or older.

• Qualified Charitable Deductions (QCD). Individuals over 70.5 are permitted to transfer up to $100,000 a year from their traditional IRA directly to a qualified charity, tax-free (even if they are not itemizing their deductions). QCD’s from an IRA count toward and individual’s required minimum distribution and excluded from one’s taxable income. Married couples filing jointly can donate up to $200,000 annually.

• Charitable Giving: Americans gave $499.33 billion during 2022 ($1.37 in donations per day), down -3.4% from 2021. Of this amount, individuals gave $319.4 billion, representing 64% of all charitable giving and mega-gifts by individuals of $450 million or more totaled $14 billion. More than $45 billion was given via gifts in a will or trust, an increase of 2.3%. Giving to overseas charities increased noticeably during 2022, likely in response to Russia’s aggression in Ukraine (Financial Advisor Magazine).

It is important to understand that giving landscape to know how to get the most out of what you give.   Working hard for success and sharing our success with others are the natural outcome many of us enjoy.  Making the most of what we give to those who have the least is a goal of many of us and coordinating those objectives with family legacy issues ties the gift up with a bow.

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One of the most consequential decisions in your estate planning is who to name as trustee.  The trustee’s level of knowledge, commitment, ability and skill will have an enormous impact on the intended purpose of your trust.   Despite the importance of this decision, it is often given less consideration than the structure of your plan or choice of attorney.  Even the most well-drafted estate plan will fail to achieve its purpose if the trustee you select fails to carry out their role properly.

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The simplicity and complexity of Portability often creates unintended consequences.  Let’s discuss how to steer clear of traps for the unwary and anticipate the credit to come as we seek to understand the nuances of one of the newest features of the estate tax law.  Optimizing the use of the Deceased Spousal Unused Exemption (DSUE) and avoiding common errors is crucial to make the most of this new law.

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The topic of south Dakota as a favorable trust situs often leads to a discussion comparing the virtues of South Dakota versus Delaware.  Whis jurisdiction is best?  Why South Dakota?  Since abolishing the rule against perpetuities in 1983, South Dakota has worked diligently to become the most trust friendly situs in the nation.  The following simple table compares ….

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