Cardinal Point Wealth Management Warns of Major Estate Tax Exemption Changes in 2025

Cross-Border Financial Advisor Sounds the Alarm on Upcoming Estate Tax Exemption Changes
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Cardinal Point Wealth Management is advising individuals and families to take note of significant upcoming changes to the U.S. federal estate tax exemption. These changes could significantly impact estate planning strategies, especially for those who have benefitted from the increased exemption under the Tax Cuts and Jobs Act (TCJA) of 2017.

The TCJA temporarily doubled the federal estate tax exemption, allowing individuals to pass up to $13.61 million to their heirs tax-free in 2024 and married couples to transfer up to $27.22 million. However, this increased exemption is set to expire, or "sunset," at the end of 2025. Starting January 1, 2026, the exemption levels will revert to approximately $6 million for individuals and $12 million for married couples, adjusted for inflation, unless Congress intervenes.

Cardinal Point Wealth Management [https://cardinalpointwealth.com/our-story/] stresses that the sunset could dramatically alter the estate planning landscape for high-net-worth individuals, particularly those with cross-border interests between the U.S. and Canada.

What is the Estate Tax Exemption?

The estate tax exemption defines the value of assets an individual can pass to heirs without incurring federal estate taxes. In 2024, this exemption stands at $13.61 million for individuals and $27.22 million for married couples. The TCJA's doubling of the exemption has provided families with a temporary advantage, allowing them to transfer more wealth tax-free than ever before.

However, unless legislative action is taken, the current exemption will sunset at the end of 2025. When the law reverts to pre-TCJA levels in 2026, many more estates will become subject to federal estate taxes levied at rates up to 45%.

Impact of the Estate Sunset on U.S. Citizens and Canadian Expats

Cardinal Point Wealth Management advises that the reduced exemption could have far-reaching implications for U.S. citizens and Canadian expats living in the U.S., especially for those with larger estates or complex financial arrangements. Here's how this change could affect estate planning:

- Increased Tax Liability: After the exemption decreases, estates that exceed the reduced thresholds will be subject to higher federal estate taxes. For example, an estate valued at $10 million might not face any federal estate taxes under the current exemption but could owe substantial taxes once the exemption reverts to lower levels.

- Potential Need for Plan Revisions: Estate plans set up to take advantage of the current higher exemption may no longer align with an individual's goals post-2025. Cardinal Point Wealth Management stresses the importance of reviewing these plans to ensure they reflect the coming changes.

- Gifting Strategies: One way to mitigate potential estate tax exposure is through lifetime gifting. Individuals may now consider transferring wealth to heirs while the higher exemption remains in effect. This can reduce the estate's taxable value and provide additional tax benefits.

- Trust Considerations: Trusts are often key components in managing estate taxes and ensuring smooth wealth transfer to future generations. Given the sunset, establishing new trusts or revising existing ones may be necessary to optimize their function under the new tax regime.

Steps to Consider Before the Sunset

As the 2025 sunset approaches, Cardinal Point Wealth Management encourages individuals and families to reassess their estate planning strategies proactively. Here are key steps to consider:

1. Consult with a Cross-Border Financial Advisor: Estate taxes can be even more complex for those with assets or beneficiaries across U.S. and Canadian borders. Cardinal Point Wealth Management recommends consulting a cross-border financial advisor [https://cardinalpointwealth.com/] who can provide expert guidance on both U.S. and Canadian estate tax considerations.

2. Review Existing Estate Plans: It is crucial to update estate plans to reflect the forthcoming changes. Plans that take advantage of the current high exemption may need adjustments to account for the lower exemption levels post-2025.

3. Evaluate Gifting Options: Gifting strategies can be an effective solution for those interested in reducing their estate tax burden. These could include direct gifts to heirs or contributions to irrevocable trusts, which can help manage the taxable value of the estate.

4. Monitor Legislative Changes: The estate tax exemption could still be subject to change if Congress intervenes before the 2025 sunset. Individuals should stay informed about any potential legislative actions that could impact their estate planning.

About Cardinal Point Wealth Management

Cardinal Point Wealth Management specializes in providing cross-border financial planning [https://cardinalpointwealth.com/cross-border-financial-planning/] services for individuals with assets and interests in both the U.S. and Canada. Their team of expert advisors focuses on customized strategies to optimize wealth management, retirement, and tax planning for high-net-worth individuals and families. Cardinal Point Wealth Management is committed to helping clients navigate the complexities of cross-border tax laws and ensuring financial security across borders.

Disclaimer: This press release may contain forward-looking statements. Forward-looking statements describe future expectations, plans, results, or strategies (including product offerings, regulatory plans and business plans) and may change without notice. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements.
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Company Name: Cardinal Point Wealth Management
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This release was published on openPR.