Walter L. Woodrick
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Sunsets, good or bad?

I have seen a lot of sunsets in my 54 years. A few stick out in my mind. After a successful turkey hunt with my daughter, Whitney, the sun cast the entire sky in a tasteful orange that gently engraved in my mind the silhouette of her carrying her turkey in front of me. Another was off the coast of the cliffs in Negril, Jamaica. My screensaver is a sunset off the western-facing coast of Cape San Blas in October of last year. 

Wendy and I are excited about the sunsets we hope to see (Lord willing) from the front deck of our future home at 1203 Constitution Drive. Here’s the spin for this article: There is another sunset on the horizon.

Currently, Americans can pass at their death $13.61 million to their heirs without paying any federal gift or estate tax. A couple can pass $27.22 million. Let’s be realistic: while there are some people who have this type of net worth, the percentage is small. The Tax Cuts and Jobs Act (TCJA) of 2017 is set to expire (sunset) on Dec. 31, 2025, at which time this amount will revert to $5.6 million per individual – indexed for inflation. This amount will affect a larger number of people, and it could be very expensive for their heirs. Does this include you now? If not, might it include you in 10 years?

First, add up the value of all your assets, at today’s market value, plus the value of any life insurance that you own and will be payable at your death. Let’s say, for example, this adds up to $5 million. As of 2026, your estate would not be subject to any estate tax. But, in 10 years at a 7% growth rate, your estate would be worth roughly $10 million. Thus, you would have (roughly, for simplicity) a taxable estate of around $4 million. At a 40% estate tax rate, your heirs would owe $1.6 million. Thus, instead of receiving $10 million, your heirs would net $8.4 million. And they would have to have the available cash to write that check to the IRS.

What can you do now to address this? Ask a certified financial planner practitioner to perform a thorough financial planning analysis for you that can forecast what the unique combination of your current net worth, income, expenses, taxes, and gifts might be worth in future years. This normally surprises people. Based upon those findings, if you have a cushion of value that you don’t really need (be sure and factor in the need to pay for long term care!), you can start a gifting program to reduce your taxable estate. Currently, you can give $18,000 to anyone (gift tax exclusion). If you give more than that, a gift tax return must be filed that notates this excess amount was given and you can choose to pay gift tax now or have the amount you can pass free from estate tax reduced at your death. You can give to charity. You can also spend it. There are more sophisticated and complex solutions available, too, but I don’t have the space to include that in this setting.

We are not promised tomorrow – enjoy every sunset you can!

Gulf County resident Walter L. Woodrick is a certified financial planner practitioner, and the author of two books. Website: Text: 850.724.1369. Securities and advisory services are offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. This information is not intended to be a substitute for specific individualized tax or legal advice. Individual tax or legal matters should be discussed with your tax or legal professional. #593110-1

Meet the Editor

David Adlerstein, The Apalachicola Times’ digital editor, started with the news outlet in January 2002 as a reporter.

Prior to then, David Adlerstein began as a newspaperman with a small Boston weekly, after graduating magna cum laude from Brandeis University in Waltham, Massachusetts. He later edited the weekly Bellville Times, and as business reporter for the daily Marion Star, both not far from his hometown of Columbus, Ohio.

In 1995, he moved to South Florida, and worked as a business reporter and editor of Medical Business newspaper. In Jan. 2002, he began with the Apalachicola Times, first as reporter and later as editor, and in Oct. 2020, also began editing the Port St. Joe Star.

Wendy Weitzel The Star Digital Editor

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