WEDNESDAY, OCTOBER 23 / 1:00PM – 1:50PM / ROOM – ARCHER EAST
SPEAKER: Shelby Follis, CPA, Tax Manager, with LBMC PC
SESSION TITLE: Time is running out! Estate planning before 2026
SESSION DESCRIPTION:
This presentation is meant to make advanced preparers to partners aware of the major changes coming in estate planning. There is a sense of urgency on this since we only have until 1/1/2026 to use the increased lifetime exemption. It would begin with a background of the law changes, a brief overview of how the estate and gift tax system works, and end with best practices for bringing this up to clients.
Field of Study: Taxes
Program Level: Intermediate / 1 CPE credit / technical
Prerequisites: None
Advance Preparation: None
Speaker BIO:
Shelby Follis is a tax manager at LBMC. After 3 short years in her career, she was promoted to manager because of the passion for learning. She has written several pieces for her firm and the TSCPA Journal where she is on the tax column writing team. Her background focuses on high net worth individuals and investment partnerships. He goal is to never stop learning and help others understand the ever-changing landscape of the finance world.
Email: shelby.follis@lbmc.com
LinkedIn: https://www.linkedin.com/in/shelby-follis-10135a143?lipi=urn%3Ali%3Apage%
Website: LBMC | Tax Audit HR Security Tech | CPA Advisors Consultants
Company & Add: LBMC PC, 201 Franklin Road, Brentwood, TN 37027
YOU DON’T WANT TO MISS THIS SESSION! See some presentation highlights below!
Estate planning can be a morbid matter that may only impact a small percentage of taxpayers. However, as CPA’s we are responsible for ensuring our impacted clients are prepared for the possible gift and estate tax changes on the horizon. With the estate and gift tax lifetime exemption being reduced back to half of what it has been on 1/1/2026, individuals are closing in on the final opportunities for major tax savings. Many key features of the Tax Cuts and Jobs Act are scheduled to sunset in 2026 provided Congress takes no action to extend. In short, the lifetime exemption is deducted from the value of each individual’s gifts during their life. Any remaining exemption would then be applied to the value of the estate at death. Since the beginning of 2018, taxpayers have been enjoying an increased lifetime exemption of $10M with adjustments for inflation, when in the previous years it was only $5M. In 2024, the lifetime exemption is $13.61M. However, after 2025 it is expected to drop down to approximately $7M. Fortunately, the IRS provided final regulations in 2019 explaining that any taxpayers who take advantage of this increased exemption would not be penalized later if it returns to its lowered amount. With a tax rate that quickly reaches 40%, high-net worth individuals could potentially save millions with proper planning. However, time is running out. There may be a little over a year left to enjoy this doubled exemption.
When planning, a taxpayer must consider what he or she can give away tax free during his or her lifetime by taking advantage of annual exclusions, gifts to charity, and gifts for education expenses paid directly to the institution. Anything beyond these tax-free gifts will require an annual gift tax return. If the transfer occurs during a taxpayer’s lifetime, the transfer is subject to gift tax, and a Form 709 may be filed. If the transfer occurs at the taxpayer’s death, then the transfer is subject to estate tax, and a Form 706 may be filed. At date of death, an estate is valued for the estate tax. The gross estate includes all property owned or controlled by the decedent, which can include personal, tangible, or intangible property. Then, deductions are applied along with the remaining lifetime exemption to get the taxable estate. The Gift and Estate tax system applies exclusions and exemptions at the individual level. However, married couples can combine their exemptions and exclusions for planning purposes even though two returns will still be filed. Unlike income tax, the value of an asset when it was first obtained by the transferor is not the taxable value of a gift or estate transfer. Instead, the property is valued at its fair value at the date of gift or death.
As trusted advisors, we should be informing clients of the urgent need for estate planning now. One should begin alerting clients that may be subject to the gift and estate tax to see if they need further guidance. The estate planning team should include the tax preparer, a practicing attorney, and a valuation specialist with the main goal being set by the client themselves. One does not have to be an expert in estate planning, but one should be knowledgeable enough to recognize the need.