5 Tips for Successful Planning with Your Clients’ Estate Tax Lifetime Exemption

The Full Exemption Can Be Used Before It Drops – There will be no claw-back of the excess gift into the estate when the exemption amount is reduced by 50% on January 1, 2026.

Spouses Have Two Exemptions – A married couple can transfer up to $24,000,000 of their combined net worth without gift or estate tax before the reduction.

Spouses can use Both Exemptions at the Second Death – If one spouse dies with any unused exemption leftover (which occurs often when all property is left to the surviving spouse under the unlimited marital deduction) his or her unused exemption can be preserved and used by the surviving spouse at the second death, but the unused exemption is preserved only if an estate tax return is filed at the first death, whether any tax is owed or not!

Spouses with a Limited Estate – One spouse can take partial advantage of the current high exemptions by using all of one exemption first

Spouses can Insure Against Unavoidable Estate Tax Liability More Economically – Because the estate tax bill on a married couples estate can be (and usually is) easily pushed to the second death, life insurance benefits aren’t needed until then. Always call for a sales ledger for survivorship coverage on the couple in an amount covering the anticipated liability. The joint life expectancy dramatically reduces the cost of coverage.