Although the estate and gift tax exemption for 2023 is $12.92 million per person, meaning a married couple can pass $25.84 million tax-free, this is only temporary. The exemption will automatically revert to $5 million (adjusted for inflation) in 2026 if Congress doesn’t make any changes before then.
While there’s no way to know now what revisions (if any) will be enacted to the estate-tax and gift-tax laws, it’s a good idea for you to make “annual exclusion” gifts by the end of the year, which is only a couple of days away.
These gifts don’t count toward your exemption and can be up to $17,000 per person this year, or if your spouse joins in the gift, $34,000 per person.
If you’re in a position to do so, you should consider making much larger gifts. This is because the Treasury Department issued regulations stating that there won’t be a “clawback” if you make a gift now and the exemption is later reduced.
A further reason to consider year-end gifting is that, in addition to the federal estate tax, nearly half the states have a state estate or inheritance tax. In Oregon, the exemption from estate tax is only $1 million, and in Washington, it’s only $2.193 million.
Please feel free to contact us if you have questions about or need assistance with your estate planning.
You may also be interested in obtaining a copy of Estate Planning (in Plain English)®, written by members of this law firm and available through Skyhorse Publishing, Amazon, Barnes and Noble, and Bookshop (an online bookstore that allows you to support your favorite independently owned bookshop.)
Image by Marco Verch; CC BY 2.0 DEED, Attribution 2.0 Generic
