Federal Gift Tax Exemption

Presently, the federal gift tax exemption is $13,610,000 per person or $27,220,000 for a married couple. This is scheduled to decrease on January 1, 2026, to about $7 million per person or $14 million for a married couple. 

This means there is a significant planning opportunity to use the current high exemption amount. This is important because many parties which to avoid paying an estate or gift tax of 40% on the transfer.  This planning opportunity will disappear after 2025 (unless Congress acts to change the law). 

It is possible to create trusts that will ultimately benefit your chosen beneficiaries in a manner that is tax efficient. The idea is to protect them from future problems. for example, creditors and divorce. A trust allows for flexibility for the future.

Tax Avoidance Techniques

Estate tax avoidance involves employing legal strategies to minimize the impact of estate taxes on an individual’s wealth transfer to heirs upon death. Taking gift tax exemptions into account, various techniques exist to mitigate the estate tax burden. This ensures that a substantial portion of an individual’s assets passes on to beneficiaries.

One commonly used approach is establishing a revocable living trust. This allows an individual to maintain control over their assets during their lifetime. Also, this helps avoid probate and potentially reducing the taxable estate. Tax avoidance techniques requires an analysis of gifting opportunities, which can be managed through a trust.

Lifetime gifting is another effective technique, enabling individuals to transfer assets to heirs before death, thereby utilizing the annual gift tax exclusion and reducing the taxable estate.

Utilizing the marital deduction is a fundamental method for married couples, allowing the unlimited transfer of assets between spouses without incurring estate taxes. Charitable giving also plays a role in estate tax planning, as donations to qualified charitable organizations may reduce the taxable estate while benefiting the community.

Plan For Gift Taxes

Single persons and families with an interest in using their current high estate and gift tax exemption amount must start their planning process, before this opportunity is taken away by Uncle Sam.

This law office anticipates the rush for such estate planning will be quite high. As a result, consider this process before it is to late.