From The Internal Revenue Service’s (IRS’s) Release Of The 2024 Lifetime Exemption

2024 Lifetime Exemption

Current Developments: November 2023 Review

Recent times have witnessed pivotal changes in estate planning, elder law, and business law. These include the Internal Revenue Service’s (IRS) declaration of the 2024 exemption limits for lifetime and annual gifts, as well as the Social Security Administration’s 2024 cost-of-living adjustments. Additionally, a final rule has been set forth regarding the usage of FinCEN identifiers under the Corporate Transparency Act. To keep you informed of these legal evolutions, we present a comprehensive analysis of their potential impact on your legal practices in estate planning, elder law, and business law.

Estate Planning

Internal Revenue Service Announces 2024 Exemption Figures

Revenue Procedure 2023-34 (Dated: November 9, 2023)

On November 9, 2023, the IRS introduced Revenue Procedure 2023-34. This document outlines the annual inflation adjustments for tax provisions applicable to individual taxpayers for the 2024 returns. Key adjustments include:

  • The exemption amount for estate, gift, and generation-skipping transfer taxes is now $13,610,000 for 2024, up from $12,920,000 in 2023.
  • The annual gift exclusion amount is raised to $18,000 for the 2024 calendar year, a rise from $17,000 in 2023.
  • For 2024, gifts up to $185,000 to a non-U.S. citizen spouse (excluding future interest property gifts) are exempt from the taxable gifts tally, an increase from $175,000 in 2023.

Key Insights: These adjustments reflect the ongoing inflation trend. The raised basic exclusion amount permits individuals to transfer an additional $690,000 ($1,380,000 for married couples) without incurring transfer tax in 2024 compared to 2023. The raised annual gift exclusion, witnessing its third increase in as many years, signifies ongoing fiscal adjustments. Estate planning lawyers should guide clients to leverage these increased limits, especially considering the impending reduction of the exemption amount post-2025.

Elder Law and Special Needs Law

Social Security Administration’s 2024 Adjustments

The Social Security Administration has announced a 3.2% COLA for 2024, applicable to Social Security and SSI beneficiaries. This adjustment impacts around 71 million Americans.

Takeaways: While lower than 2023’s 8.7% COLA, this increase aids individuals reliant on these benefits to counter inflation’s impact. Elder law attorneys should use this update to ensure their clients’ estate planning aligns with current economic conditions and goals. For individuals with disabilities and low-income seniors, special needs trusts or ABLE Accounts can be beneficial in maintaining SSI eligibility while covering additional expenses.

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