In response to inflation rates, the IRS recently announced a few gift and estate tax changes that it will begin implementing in 2023. The changes will likely benefit your estate plan. If you don’t have a plan, or are looking to modify your existing plan, please contact a skilled estate planning attorney today!
Gift Tax Annual Exclusion
Beginning on January 1, 2023, the IRS will increase the gift tax annual exclusion from $16,000 to $17,000 per recipient. This change means that you can gift $17,000 to as many people as you want without:
- Using up your lifetime gift and estate tax exemption, or
- Paying gift tax.
If a married couple is gift-splitting, the couple can gift a combined $34,000 per person in 2023 without paying a gift tax.
Combined Gift and Estate Tax Exemption
Beginning on January 1, 2023, the IRS will increase the combined gift and estate tax exclusion. It is currently $12.06 million and will increase to $12.92 million. Note that the combined gift and estate tax exemption represents the total amount of gifts you can make during your lifetime (including any transfers made at your death) before you have to pay a gift or estate tax.
Generation-Skipping Transfer Tax Exemption
The IRS will be increasing the generation-skipping transfer tax exemption in 2023. The exemption is currently at $10 million. The IRS will be increasing it to $12.92 million.
This increase will definitely benefit you if you’re looking to put assets in a trust for the well-being of future generations. If you do, the beneficiary can allocate his/her generation-skipping transfer tax exemption to the trust. This will result in the trust assets remaining in the trust for multiple generations without any gift, estate, or generation-skipping tax due on distributions or upon a trust’s termination.
Please note that there are a variety of different ways that you can use the above changes to your benefit. You should definitely consult with an estate planning attorney today to see if you can utilize them!
Contact The McWilliams Law Group for Help
The established California and Washington estate planning attorneys at the McWilliams Law Group help you prepare for the future today.
Our firm provides legal assistance with the following:
- Will drafting, execution and review
- Living Trusts
- Advance healthcare directives (living Wills)
- Powers of attorney
- Estate and gift tax issues
- Guardianships and conservatorships
- Choosing the appropriate executor and/or trustee
The skilled attorneys at our firm can help thoroughly analyze your estate and strategize the best means of transferring your assets, minimizing taxes, establishing guardianship, and supporting philanthropic causes. Contact us now and let us help protect your personal security, family, and legacy.
