The 2019 inflation adjusted amount for the federal gift and estate tax exemption is now $11.4 million per person. Because of “portability,” a husband and wife can either gift or pass upon death $22.8 without paying any gift or estate tax, regardless of how assets are titled among spouses. The $11.4 amount increased from the 2018 amount of $11.18 million. For purposes of annual exclusion gifts, $15,000 per year remains the amount each person can give to anyone without reducing the $11.4 million they can pass upon death. E.g., Mom and Dad together can give $30,000 to each of their four children, thereby removing $120,000 from their taxable estates without reducing the $22.8 million they can pass upon their deaths free of estate tax.
This generous $11.4 gift and estate exemption is scheduled to “sunset” in 2026, and be reduced in half. More concerning is that a different President and Congress could change the law in 2021. Thus, many affluent taxpayers are transferring assets now while they can do so without any gift or estate tax consequence.