With the new year just months away, now may be a great time to consider some year end tax planning. If you have a large estate, gifting during your lifetime can be a wise strategy to help reduce estate taxes.
The federal estate tax exemption is scheduled to increase from 2022’s $12.06 million to a record high of $12.92 million per person for 2023. This means an individual could shield $12.92 million from federal estate or gift taxes, and a married couple could safeguard $25.84 million with proper planning. However, these historically high exemptions are scheduled to be reduced by 50% on January 1, 2026 unless Congress proactively takes action to extend them.
Fortunately, in 2019, the IRS finalized rules stating previous lifetime gifts would be excluded if the exemption is lowered. So now is an ideal time to review your estate planning and gifting options.
The annual gift tax exclusion will increase from $16,000 per donee in 2022, to $17,000 per donee in 2023. This means that any individual can give up to $17,000 and a married couple could gift up to $34,000 per donee without incurring gift tax consequences or reducing their remaining lifetime exemption.
To learn more about additional planning opportunities to transfer wealth and shelter assets from estate taxes, contact one of Buckley Fine’s Estate Planning attorneys at 847-381-0011 or email us at attorneys@buckleyfinelaw.com.