It’s an election year, which means you may have more questions than answers as you work with your advisors to build out your financial and estate plans. In particular, the looming sunset of key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 has created a tremendous amount of ambiguity.  

For many taxpayers, the potential sunset of the TCJA’s higher estate tax exemption is top of mind. Unless Congress intervenes, the exemption is set to fall after Dec. 31, 2025, from roughly $27 million per couple to approximately $14 million per couple (depending on inflation adjustments). 

No one has a crystal ball, and it is impossible at this point to know whether or when you should implement planning strategies to address potential changes in the law. Nevertheless, if you are among those who would be affected by the estate tax exemption’s drop, it’s important to know that charitable strategies can fit nicely into a gifting plan that would help offset the sunset’s impact. 

Some families may lean into annual exclusion gifts ($18,000 per gifting spouse per recipient in 2024) to family members and other individuals to reduce taxable estates without eating into the lifetime gift and estate tax exemptions.  

You may also consider a parallel strategy for charitable gifts. Gifts to charities are deductible for gift and estate tax purposes (in addition to income tax purposes) and will also reduce the value of your taxable estate without using your exemption. For example, if you are making annual exclusion gifts to family members, you may also consider making stock gifts of an equal amount into your fund at NCCF.  

Some people are updating their estate plans to increase a bequest to their donor-advised or other fund at NCCF. This would help blunt the impact of estate taxes, and the bequest can be adjusted during lifetime as planning goals and estate tax laws evolve.  

The community foundation is here for you! Our team is happy to help you navigate the opportunities and pitfalls presented by potential changes in the tax law. It is our pleasure to work with you and your family to maximize your charitable goals. 

This article is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.