2023 Year-End Planning for Gifts and Estates

The annual gift tax exclusion is $17,000 for 2023 and will rise to $18,000 in 2024.The unified estate and gift tax exclusion amount, $12,920,000 for gifts made and decedents dying in 2023, will rise to $13,610,000 for gifts made and decedents dying in 2024.

Annual gift tax exclusion – For 2023, up to $17,000 of gifts made by a donor to each donee is excluded from the amount of the donor’s taxable gifts. The exclusion increases to $18,000 in 2024. A gift that qualifies for the exclusion is not subject to gift tax or Generation-Skipping Transfer Tax. Unused annual exclusions can’t be carried over and are forever lost. It is best to make exclusion-eligible gifts as early as possible so as not to lose any of their benefit. A married couple could, for example, gift another married couple up to $68,000 and still qualify for the exclusion under the split gift rule.

Gifting income-producing or appreciated propertyThe donor and donee can realize overall income tax savings when income-earning property is given to a donee who is in a lower income tax bracket than the donor or who is not subject to the NIIT. Estate tax can also potentially be saved because both the value of the gift on the date of transfer and its post-transfer appreciation (if any) are removed from the donor’s estate. Income can also be shifted to lower-bracket family members by giving them appreciated property to be sold by them at a gain. A valid gift of property that is completed before the property is sold generally shifts the tax liability on the gain from donor to donee, subject to Kiddie Tax rules.

Follow a leading professional resource HERE for 20 important estate planning steps to evaluate before the end of 2023!