Strategic Estate Planning Before 2026 BEA Change Can Protect Taxpayer Assets from Gift and Estate Tax

Olshan Employee Benefits and Tax & Personal Planning partner Stephen Ferszt authored an article in New York Law Journal entitled “Strategic Estate Planning Before 2026 BEA Change Can Protect Taxpayer Assets from Gift and Estate Tax.” Olshan Tax & Personal Planning associate Alexander Sanchez-Figueroa assisted with the article. The article details strategic estate planning ahead of the 2026 Basic Exclusion Amount (BEA) changes. An overview is provided of how taxpayers, especially those in New York, can protect their assets from gift and estate taxes. It explains, “In 2017, Congress enacted the Tax Cuts and Jobs Act (“TCJA”), which doubled the estate and gift tax exemption. Due to Congressional cost requirements, this increase is set to expire on January 1, 2026, reverting to pre-TCJA levels, indexed for inflation.” For 2024, the BEA is $13.61 million for individuals and $27.22 million for married couples – a reduction from the 2017 increase. What does this mean for taxpayers? “Determining whether gifting today is beneficial requires careful consideration of broader financial objectives. For instance, young taxpayers should ensure that gifting does not deplete their assets. Similarly, retirees must strike a balance between strategic gifting and securing sufficient resources for retirement,” they write. The piece further delves into the Generation-Skipping Transfer (GST) tax, designed to prevent avoidance of estate taxes by transferring assets directly to individuals who are a generation below their children. The GST Tax exemption is equal to the BEA and was similarly increased for the years 2018 through 2025.