New Higher Estate and Gift Tax Limits for 2022

A new year brings with it new federal tax exemption numbers.  For 2022 deaths, the estate and gift tax  jumps from  $11.7 million in 2021 for an individual to $12.06 million per individual.  The gift tax annual exclusion climbs from $15,000 from previous years to $16,000 for 2022.  This article will summarize changes in federal gift and estate tax law with content from an article from Forbes.com, which can be found here:  

What do these new numbers mean?

These numbers mean that wealthy tax payers can transfer more to heirs during their lifetime and upon death. 

 

  • How are gifts used as a strategy for transferring wealth?

 

One strategy that is commonly used is to transfer gifts to heirs every year to the max allowable, which will be $16,000 per individual in 2022.  Spouses can each make a $16,000 gift, which doubles the impact. 

 

  • Is there a limit on how many can receive gifts from you? 

 

You can transfer $16,000 to as many individuals as you like, so children, grandchildren, etc. can each receive that amount without a federal tax consequence to the giver. 

 

  •  What about appreciation with the gifts?

 

Another advantage of transferring wealth through gifts during your lifetime is that the appreciation that would result from any investments that those gifts were used to purchase would go to the new generation and therefore not be in your taxable estate. 

 How are tuition payments and medical expenses a wealth transfer strategy ?

You can make unlimited direct payments for medical expenses or tuition for an many individuals as you like.   These can add up and be very powerful to help the next generation create a better situation.  

Where can I find an attorney who can help me with estate planning in California?

An experienced attorney can help you make advantageous estate planning decisions for the benefit of you and your loved ones.  At the Law Office of David Knecht, at 707-451-4502, we have extensive experience in estate planning in California and can help you create the right plan for you.