Gift Taxes

The gift tax laws allow you to gift $15,000 each year to as many people as you would like without reporting these gifts to the IRS. If you have five children, for example, you can gift them $75,000 per year. If you are married, each of you and your spouse can gift $75,000 to your children, thereby allowing the two of you to transfer $150,000 to your children each year without reporting the transfers to the IRS.

Annual gifting offers one of the easiest methods of reducing your estate, and the advantages are easily understood. The estate tax laws allow you to leave only a specified amount to your family free of the federal estate tax. When annual gifts are made, each dollar given away is removed from your estate and, generally, will not be subject to estate taxes when you die.

You may gift more than the annual exclusion amount each year by using some of your estate tax exemption, but doing so requires you to file a gift tax return and utilizes a portion of your total lifetime gift and estate tax exemption. By gifting during your lifetime, you may be able to discount the value of the assets being gifted, thereby using less of your lifetime exclusion, and all future appreciation of the gifted property is moved outside of your estate.

Estate Taxes

The net value of the assets you own upon your death which exceeds your lifetime exclusion amount will be subject to estate taxes unless they are left to a surviving spouse or to a charity. Even if you leave the assets to your surviving spouse, those assets will likely be subject to estate taxes when your spouse dies and leaves the assets to his or her beneficiaries.

The amount you can leave estate tax free as of 2021 is $11.7M.  This law is scheduled to reduce the exemption to approximately $6.5M in 2026.  Of course, Congress could change the exemption before that date, or defer the effective date at which the exemption would change.

If you have a concern about how a reduction in the exemption would affect your family’s estate tax exposure, contact an attorney at Tisser Law Group, APC.

In addition to minimizing estate taxes, it is important to do planning to ensure that there are sufficient liquid assets available to pay estate taxes when they are due nine months after you die. This is especially true in Southern California, where increasing real estate values have placed many people in potential estate tax situations.

To learn more or to speak with any member of our legal team today, give us a call at (818) 226-9125.

Advanced Estate Tax Planning Techniques

The probate and estate tax planning attorneys at Tisser Law Group, APC utilize several techniques to help reduce estate taxes, including:

• Gifts and Sales to Intentionally Defective Grantor Trusts (IDGTs)
• Qualified Personal Residence Trusts (QPRTs)
• Grantor Retained Annuity Trusts (CRUTs)
• Charitable Remainder Trusts (CRATs and CRUTs) and other charitable planning
• Generation-Skipping Transfer Tax (GST) planning

Schedule an initial consultation with one of our Encino estate tax planning attorney today at (818) 226-9125 to help you get started.