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20Feb

Estate Taxes, Gift Taxes and Exemptions

20 Feb, 2023 | Nevada Wills & Trusts, Financial |

You worked hard for your money and paid taxes as the income was earned or recognized. It seems unfair for the government to tax you again when you pass your accumulated wealth on to the next generation. But that is exactly what an estate tax does.

Fortunately, there is an exemption amount that will exclude from taxation the total amount of gifts and the value of your estate. The 2017 Tax Cut and Jobs Act increased the unified credit exemption amount from $5,490,000 to its current level of $12,060,000, which will be adjusted annually. This opens a great opportunity to pass your accumulated wealth to future generations also potentially avoiding Generation Skipping Tax as well.

However, the high exemption amount will sunset at the end of 2025 and will likely drop back to around $6,000,000 for 2026.  Keep in mind that Congress has actively sought to tax generational transfers of wealth, and some have proposed to do away entirely with the exemption.

As many know, you can make an annual gift of about $16,000 to an individual without the gift counting against the lifetime unified credit exemption amount. Married couples can gift $32,000 annually.

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