As 2022 draws to a close, what considerations should you keep in mind for estate planning in the coming year? You should be aware of three facts:
- The Federal Estate Tax Exclusion Amount is Increasing. The estate tax exclusion is the amount that can be passed to heirs without triggering any federal estate or gift tax liability. In 2022, the federal estate and gift tax exemption increased to $12.06 million per individual or $24.12 million for a married couple. In 2023, that amount will be bumped to $12.92 million per individual or $25.84 million for a married couple. As this exclusion amount continues to rise at a reasonably fast clip, in practical terms, this means that fewer people need to be concerned about potential federal estate tax liabilities.
- Washington Estate Tax Remains the Same. Washington’s estate tax exclusion amount continues at its 2018 level of $2.193 million per individual. As Sherry explained in a blog post earlier this year, the Washington legislature will need to update RCW 83.100 before the estate tax exclusion amount can be increased.
- The Federal Amount for Annual Exclusion Gifts is Increasing. You can give any amount you wish to a friend or family member, but if the amount you give exceeds the federal limit for annual exclusion gifts, “you will need to contact your CPA for assistance in filing IRS Form 709, which is the Gift (and Generation-Skipping Transfer) Tax Return.” In 2022, the annual gift exclusion amount per individual was $16,000. In 2023, this amount will be increased to $17,000. For individuals concerned about future federal or Washington estate tax liabilities, annual gifting can be an attractive option in reducing the overall level of assets that will eventually be subject to tax.
Do you have questions about how these three factors might affect your estate planning? If so, please let us know. We’d be happy to help.
This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.