The holidays are a great time to remember that gifts of unappreciated property (like cash or its equivalent) below the Annual Exclusion amount are an excellent tool for tax free wealth transfer to your heirs. For 2023, the Annual Exclusion per Donee is $17,000, meaning that you can generally gift up to that amount total during 2023 per individual without estate tax consequences. For a couple, each spouse is entitled to the full Annual Exclusion amount, so a couple can together gift $34,000 to each individual child or other heir.
These exclusions can add up quickly! For example, within these limits a married couple can gift $68,000 to another married couple in 2023 without estate tax implications when structured properly. If minimizing estate tax is a priority, annual gifting can make a huge difference in the value of your gross estate down the road.
Specific circumstances vary, however, and details like whether the asset is considered a present or future interest, for instance, can make a big difference in whether what you plan to do will work as intended—so you should always consult with an attorney regarding your specific situation before making any such gifts.
Please contact us if you would like to set up an appointment to explore your options.
For more general information, see the IRS Frequently Asked Questions.