Estate and Gift Tax Quick Facts
Take advantage of the current lifetime gift and estate planning tax exemption before it sunsets at the end of 2025. Here are some quick facts about tax breaks related to wealth transfer.
Lifetime Exclusion Limits
In 2023, your lifetime gift and estate planning tax exemption is $12.92 million.1 Starting in 2026, that amount is expected to be cut in half, so it’s a good idea to take advantage of it now as a way to transfer wealth to heirs and favorite charities free of federal taxes. Note that any amounts you transfer or gift over the lifetime exemption amount will be taxed.
Unlimited Marital Deduction
If you are married, an unlimited marital deduction allows you to leave all or part of your assets to your surviving spouse free of federal estate tax. But to use your late spouse’s unused estate tax exemption, referred to as portability, you must elect it on the estate tax return of the first spouse to die, even when no tax is due. If you don’t elect portability, you could incur a federal estate tax bill.
Gift Tax Exclusion
You can give annual gifts without being taxed. In 2023, the annual gift tax exclusion is $17,000 for individuals and $34,000 for married couples.2
For example, if you and your spouse give an annual gift of $50,000 to a specific individual in 2023, of that gifted amount, $34,000 will be a tax-exempt gift and $16,000 will count toward your lifetime gift exemption amount. Even after you surpass the lifetime exemption, you can still give up to the annual gift exclusion amount without paying gift tax.
Phased Out Lifetime Exclusion Amount
When the federal lifetime gift and estate planning tax exemption expires in 2025, it’s expected to revert back to the prior amount per individual and will be subject to inflation adjustments. The exemption is expected to significantly decrease to around $6.6 million in 2026.3
Generation-skipping Transfer Tax
Additionally, a generation-skipping transfer (GST) tax applies when you gift money and assets to grandchildren or to any unrelated person who is at least 37½ years younger than you. The GST tax is meant as a way to discourage an individual from passing assets directly to a grandchild in the hope they would avoid paying the estate tax twice (once when passing to a child and then again when they pass it to their child). The generation-skipping tax exemption is the same as the annual and lifetime gift tax exclusion.
Review Your Estate Plan
If it’s been a few years since you’ve reviewed your estate plan, or you’ve experienced a life change such as divorce or loss of a spouse, review your estate plan with your attorney and wealth advisor to update all of your key documents.
Talk to Your Wealth Team
At Mariner Wealth Advisors, our estate planning and trust services team are in-house.
They can work with you, your wealth advisor and attorney to advise you on tax-efficient estate planning.
Tax Guide: Your Resource for Year-Round Tax-Efficient Investing
Year-round planning with an advisor could help improve your overall wealth plan. Find out more by downloading our tax guide.
This article is limited to the dissemination of general information pertaining to Mariner Wealth Advisors’ investment advisory services and general economic market conditions. The views expressed are for commentary purposes only and do not take into account any individual personal, financial, or tax considerations. As such, the information contained herein is not intended to be personal legal, investment or tax advice or a solicitation to buy or sell any security or engage in a particular investment strategy. Nothing herein should be relied upon as such, and there is no guarantee that any claims made will come to pass. Any opinions and forecasts contained herein are based on information and sources of information deemed to be reliable, but Mariner Wealth Advisors does not warrant the accuracy of the information that this opinion and forecast is based upon. You should note that the materials are provided “as is” without any express or implied warranties. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
Mariner Wealth Advisors (“MWA”), is an SEC registered investment adviser with its principal place of business in the State of Kansas. Registration of an investment adviser does not imply a certain level of skill or training. MWA is in compliance with the current notice filing requirements imposed upon registered investment advisers by those states in which MWA maintains clients. MWA may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by MWA with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For additional information about MWA, including fees and services, please contact MWA or refer to the Investment Adviser Public Disclosure website. Please read the disclosure statement carefully before you invest or send money.