New 2022 Estate Planning Numbers—Time for a Tune-Up

Over the last two weeks, I shared lessons learned from my brother’s unexpected death, including the need to take your estate on a “test drive” to see how it runs if you pass away today. All too often, we discover surprises that can be fixed if we catch them before death. Expanding on that theme, New Year’s is the ideal time to do an estate planning check-up.

With the arrival of 2022 comes the opportunity to take advantage of an increase in some important numbers:

  • The lifetime estate/gift tax exemption is now $12,060,000 per person, an increase of $360,000 per person. A married couple who used their full exemptions prior to 2022 can now transfer an additional $720,000 out of their estates. Doing so saves the 40% estate tax on the amount transferred, plus saves the 40% tax on any growth in those assets between now and the date of death.
  • The annual exclusion for gifts rises from $15,000 to $16,000. You can now make annual gifts of $16,000 to anyone and remove those assets from your estate without having to eat into your lifetime exemption. A married couple can join together and make gifts of $32,000 to as many people as they wish.

I want to share an article I wrote that was recently published, as it’ll be helpful in doing an estate planning review. The article is geared toward advisors, but it also speaks to each of us as we dust off our estate plans. The article is entitled “Estate Planning for 2022: Questions to Ask Your Clients,” and it addresses these ten questions:

  1. Do you own anything in your name (other than retirement accounts)?
  2. After you’re gone, will your retirement assets be protected?
  3. If you died right now, would your children’s inheritance become divisible upon a divorce?
  4. Have you taken advantage of the doubled estate tax exemption?
  5. Can you have your cake and eat it too?
  6. Do you have any low basis assets?
  7. Do you love your grandkids equally?
  8. Do you have a “red file?”
  9. Do you have a business succession plan in place?
  10. Are you worried an inheritance will ruin your children?

Here’s a link to the article. Please note that the explanation under question 4 refers to a $23,400,000 estate tax exemption for a couple, but as pointed out above, that number is now $24,120,000. Don’t forget that the doubled exemption sunsets in 4 years, so any exemption you haven’t used by December 31, 2025 declines by about $6,000,000 per person at the stroke of midnight. Cinderella’s coach will turn back into a pumpkin. Now is the time to “use it or lose it.”

The Blum Firm would be honored to help with your estate planning tune-up. May 2022 be a productive and fulfilling year!

Marvin E. Blum

The Blum family wishes you a joyful and fulfilling 2022!