Beginning in 2024 the Estate and Gift Tax exemption for all citizens is $13,610,000.00 dollars. In addition, a surviving spouse can also include the unused portion of their deceased spouse exemption. The new law makes the exemption “portable” between spouses. For example, if the first spouse to die uses only $2 million dollars of his exemption the surviving spouse will be able to exclude $23,840,000.00 million dollars of her estate from Federal Estate and Gift Tax.
Please be aware this exemption is not automatic and requires the first spouse to die to file a Federal Estate and Gift Tax Return (706) even if no tax is due.
To give estate plans the most flexibility to adapt to ever changing personal wealth and exemption amount we often advise our clients to adopt “Disclaimer Trusts”. Their wills will leave everything to their spouse but the spouse has the option to transfer assets to the exemption or by pass Trust. This enables her to provide for her financial needs and utilize the Estate Tax exemption then in effect.
Gift Tax Exclusions Remains at $18,000
The annual gift tax exclusion increased to $18,000 in 2024. That means you can give $18,000 annually (or $34,000 when a spouse joins in the gift) to any number of different people and none of these gifts will be subject to estate and gift taxes. You can also give unlimited amounts towards tuition and medical expenses if you pay the provider directly.