The gift tax annual exclusion increased this year by $1,000 to $17,000. This exclusion is the amount an individual may give per person without incurring a gift tax or reporting obligation. Thus, any gift of $17,000 (or less) does not need to be disclosed to the IRS and will not be taxed or serve to reduce the donor’s lifetime exemption.

For married couples who elect gift-splitting (which requires a gift tax filing), this annual exclusion can be combined for up to $34,000 per person. Therefore, parents are now able to give each child $34,000 without any gift-tax impact.

The IRS also increased the estate tax lifetime exemption to $12,920,000. This is an $860,000 increase. The lifetime exemption is the amount an individual can transfer upon death (or during life), without incurring any estate tax (or gift tax). As a result, married couples can now transfer up to $25,840,000, tax-free. This is a $1,720,000 increase from 2022.

The generation-skipping transfer (“GST”) tax exemption is also now $12,920,000. The GST tax is assessed when a gift or bequest skips a generation, such as a grandparent transferring property to a grandchild. GST tax is designed to prevent the avoidance of estate tax for one or more generations by taxing certain gifts and distributions to grandchildren or great-grandchildren.

Without further action by Congress, time is limited to take advantage of these higher limits. The current law providing these larger estate and gift-tax exemptions will sunset after 2025, at which point the exemptions are scheduled to return to pre-2017 levels. If that happens, the exemptions will be roughly cut in half.

We continue to monitor IRS announcements and new legislation. In the meantime, many wealth transfer tools can continue to be utilized to potentially reduce transfer taxes, including spousal lifetime access trusts (SLATs), grantor retained annuity trusts (GRATs), family limited entities, and valuation discounts for certain closely-held business interests. Now may be the best time for families to take advantage of this favorable transfer tax landscape.

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Mr. Berner is also a Trustee of the Woodland Cemetery Association of Dayton, one of NAHA’s local aviation heritage sites.  Other NAHA sites include the National Museum of the United States Air Force, Dayton History, Wright State University Wright Archives, Grimes Field, WACO Field, the National Aviation Hall of Fame, and the Armstrong Air & Space Museum.    

The post Robert Berner was appointed to the Board of Trustees of the National Aviation Heritage Alliance (NAHA). appeared first on Bailey Cavalieri.

The post Rob Berner and Matthew Schaeffer presented “Current Issues in Retailer Chapter 11,” a seminar for the American Bankruptcy Law Forum. appeared first on Bailey Cavalieri.