Franklin, TN – There is never a wrong time to start planning for a child’s future. Franklin-based estate planning attorney Trent Linville from The Law Office of Trent Linville says that the 2023 estate and gift tax exemptions make it easier than ever for parents to begin planning now. The attorney explains that married parents may now gift $34,000 each year to their heirs without concern of paying a gift tax.
In 2012, the American Taxpayer Relief Act created the first gift tax exemption program in the United States. This exemption is essentially the amount of money an individual or couple can protect from transfers of their assets both during their lifetime and at the time of their death. The original exemption was set at $5 million per person. In 2017, the Tax Cuts And Jobs Act more than doubled this to $11,180,000 per individual. Adjusted for inflation, the new numbers for 2023 come out to $12,920,000/$25,840,000 for an individual or married couple, respectively.
Estate planning attorney Trent Linville explains further that individuals can gift $17,000 each year (beginning on January 1, 2023) before encroaching on the lifetime credit amount.
What does this mean for parents and grandparents looking to pass wealth? Linville explains that this is an excellent way to transfer assets to future generations a little at a time without worrying about taxes eating into an inheritance. In other words, grandparents can give each of their grandchildren $17,000 each year until their death, and that money is not taxable.
There are obvious benefits to transferring wealth early on. Estate planning attorney Trent Linville says that families in the Franklin area, which tends to be a high-wealth location, can save their children and grandchildren thousands to hundreds of thousands of dollars in the long term. Further, transferring assets now removes any question of ownership in the future. If a parent or grandparent passes after a gift is given, it likely won’t be targeted as an asset by heirs that feel slighted by a will.
Trent Linville encourages all of his clients to begin an estate plan as early as possible, ideally before their children are born. An estate plan is an outline of how assets will be used and distributed. This can take place either before or after someone’s death. A few things he encourages people to keep in mind as they formulate an asset plan include:
- Assets held jointly, such as real estate, may go directly to the joint shareholder. This depends, however, upon how the assets are titled.
- Assets held in an account with a designated beneficiary pass directly to this beneficiary upon the account holder’s death. This includes brokerage, savings, checking, retirement, and life insurance accounts. Trent Linville recommends keeping these up-to-date.
- Assets in a trust account are distributed according to the current terms drafted by an estate planning attorney. Other assets may be required to go through probate. Passing wealth along before an individual dies is an excellent way to avoid many assets from being part of public record.
Families throughout the Nashville area, including in Brentwood, Columbia, and Spring Hill, are encouraged to reach out to the Law Office of Trent Linville for more clarification. Estate planning rules may change each year, and it’s not always easy to keep up. An estate planning attorney stays up to date on new laws, rules, and regulations that can help local families keep as much of their hard-earned wealth as possible.
The Law Office of Trent Linville, PLLC
725 Cool Springs Boulevard, Suite 600
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Scottish Opinion journalist was involved in the writing and production of this article.