The $15 Million Question

0:05 For years, every estate attorney in the country was telling wealthy clients the same urgent thing. Use your exemption before it gets cut in half at the end of 2025. Well, that cliff never happened. Congress permanently reset the number instead, higher than it was ever before. If your estate plan was built around the old deadline, it may already be outdated and you might not know it. I'm your host, Geil Thompson, and this is Faith in Finance. So here's the background, because the why matters as much as the number. Since 2017, the federal estate and gift tax exemption, which is the amount you can pass on tax -free during life or at death, had been temporarily doubled. By 2025, it sat at just under $15 million per person, but that increase was always scheduled to expire at the end of 2025, reverting back to roughly $7 million per person. For years, that looming cliff drove a rush of last -minute gifting and trust funding because nobody wanted to lose access to the higher number. Then, in July of 2025, Congress passed the One Big Beautiful Bill Act. And it didn't just extend the higher

1:38 exemption, it made it permanent and raised it further to $15 million per individual. Yes, you heard it right. $15 million per individual and $30 million for a married couple using portability. Starting in 2027, that number adjusts upward every year for inflation. There's no scheduled sunset this time. A few details worth knowing precisely. The generation skipping transfer exemption, the one relevant to leaving assets directly to grandchildren or a dynasty trust, almost moved the $15 million. But unlike the estate exemption, it is not portable between spouses, meaning each spouse needs their own planning to use it. And portability itself, a surviving spouse's ability to use a deceased spouse's unused exemption, still requires filing an estate tax return within nine months of death, even when no tax is owed.

2:50 Missing that filing has, in real cases, caused families access to millions in exemption they were otherwise entitled to receive. So why permanent doesn't mean nothing to do? Here's where I want to push back on the natural reaction to this news, which is relief followed by doing nothing, which is what most families do. And we can't do that. First, several states still impose their own estate or inheritance tax, often at exemption levels far below the federal number. New York is a clear example. Its exemption sits around $7 million and it has what's called a cliff if your taxable estate exceeds that threshold by more than 5%. You don't just owe tax on the amount over the line. You lose the exemption entirely and owe tax on the whole estate for the first dollar. For families in states like that, The federal relief doesn't eliminate the planning conversation. It just shifts where the real risk sits. Second, and this is the part that gets missed. The biggest advantage of gifting now isn't just using the exemption before some deadline.

4:13 It's moving future growth out of your taxable estate and asset given today. keeps appreciating in the hand of whoever receives it outside your estate for the rest of your life. Something worth $15 million today growing at a reasonable rate can be worth well over double that in a decade. If it stays in your estate, that entire growth is potentially subject to estate tax later. If it is already transferred, that growth happens completely outside the calculation. Third, if your estate plan, your trust structures, your gifting strategy, your beneficiary designation was drafted assuming the old cliff, it was built around a temporary law that no longer exists.

5:01 So I need you to be aware of that. Plans built for scarcity don't automatically make sense in a world of permanence. Some structures Like certain valuation discount strategies can actually backfire under the new rule by unnecessarily lowering the cost basis your heirs received. Listen, none of this requires panic. It requires an actual review, not an assumption that permanent means finished, okay? Now, what does scripture already say about this? There's a proverb that speaks exactly to this kind of planning and it's more direct than people usually give it credit for.

5:45 And that's Proverbs chapter 13 that says a good person leaves an inheritance to their children's children, not just to their own children, but to two generations forward. Now read quickly, that can sound like a nice sentiment about being generous. But read carefully, it's actually a statement about foresight. Leaving something to your children's children isn't accidental. It requires thinking and planning in a longer time horizon than your own lifetime. And arranging things now so that the benefit actually reaches people you may never meet. is what we're talking about that's a precisely what a generational skip trust does in modern estate planning not by coincidence but because the underlining wisdom is the same it's not simply leave money behind it's planned intentionally enough that what you've built keeps compounding benefit for people two generations out here's how i'd apply it directly to this moment A permanent historical high exemption doesn't do the work directly in that proverb by itself. It does remove an obstacle. The actual leaving of an inheritance structure intentional reaching two generations forward still requires the same thing. It always has a plan reviewed and updated built by someone thinking further

7:16 ahead than their own lifetime. The cliff everyone seared seared. didn't happen that's genuinely good news but good news about the law was never a substitute for an actual plan and the oldest wisdom on this subject has always said the same thing what reaches your children's children got there because someone planned for it too If you're ready to begin your investment journey, call Joseph Wealth Management at 800 -807 -2881 or email us at info at josephwealthmanagement .com. If you have a question for Faith and Finance, call that same number and ask to be transferred to our voicemail system. Tell us your name and the city and state you're calling from. Who knows, your question might be featured on an upcoming episode. Thank you for listening to Faith and Finance. Have a great day. The Faith and Finance podcast is intended for educational, informational, and entertainment purposes only. The views and opinions expressed by the hosts and guests are their own and do not necessarily reflect those of Joseph Wealth Management, Joseph Eden Capital, or any affiliated entity. Nothing shared on this podcast should be construed as personalized, financial, legal, tax, or investment advice.

8:40 All investing carries risk, including the potential loss of principal. Listeners are strongly encouraged to consult with a licensed financial advisor or fiduciary who understands their unique circumstances before making any financial decisions. Joseph Wealth Management and Joseph Eden Capital are registered entities and operate in accordance with applicable regulatory guidelines. Business is conducted only in jurisdictions where they are duly licensed or exempt from registration.