Warning: this article contains numbers.
The Federal Estate and Gift Tax Exemption: What to Expect
With the 2024 election in the rear-view mirror, we may soon get some certainty regarding the federal estate and gift tax exemption.
What is the Federal Estate and Gift Tax Exemption?
The federal estate and gift tax exemption is currently $13.61 million per person. In 2025, it will increase to $13.99 million per person. The exemption is portable so in 2025, a married couple can protect a total of $27.98 million without paying any federal estate or gift tax.
That means most of us – like 99% – will not have to engage in expensive and cumbersome planning to avoid paying an onerous estate tax.
The huge exemption is due to the Trump Tax Cuts. However, those cuts will expire at the end of 2025. Then, unless Congress acts, the exemption will fall to just under $7 million.
While that is still a large number, the decrease threatens to catch a lot of business owners, middle-class workers, and landowners.
The Future of the Federal Estate Tax Exemption
Trump and the Republicans ran on extending or increasing the tax cuts. How will their 2024 win affect the federal estate tax exemption? From a strict estate planning perspective, it would be wonderful if the exemption was extended or even increased. It would be even better if the federal estate tax was completely eliminated.
We’ll see how it plays out. In the meantime, if you own assets of more than $7 million ($14 million for a married couple), then you may want to delay taking extreme actions to avoid the federal gift and estate tax. Put the basic documents in place now, but consider holding off on the more exotic schemes.
Understanding the Federal Annual Gift Tax Exclusion
On a related note, the 2025 federal annual gift tax exclusion is $19,000 per person. That means you, individually, can give up to $19,000 to a recipient tax-free without using up your lifetime exemption. A married couple could give up to $38,000 per recipient.
Updates to Contacting Social Security and Medicare Offices
On to other news – your friendly Social Security and Medicare offices are fed up with people not knowing who to call for help. You may think that it is their fault for having two different agencies handling overlapping programs, but that is not important now. What is important is that the Social Security Administration has decided to help you by putting together a fact sheet entitled “Who do I contact – Social Security or Medicare?”
Here are a few highlights from the fact sheet.
- To check your Medicare eligibility, look at ssa.gov/medicare.
- To review the status of your Medicare Part A or Part B claims, go to medicare.gov.
- To request a replacement Medicare card or find publications about Medicare, you can go to either medicare.gov or ssa.gov.
You might notice that both agencies supply some of the same information. Inefficiency? You decide.
Combatting Fraud with The Department of Justice
Now for fraud news. The Department of Justice has reported to Congress that it recovered nearly $700 million from 700 defendants accused of targeting older adults. That is against a backdrop of a reported $28.3 billion lost to fraud in 2023. Whatever the government is doing to combat fraud, it is not enough.
You can do your part to protect yourself.
- Do not click on email links, especially if the email is from an unknown sender or was unexpected.
- Do not enter personal information into public computers.
- Look for HTTPS at the start of a URL on a website.
- Set up online banking alerts.
- Lock your credit reports.
- Use dual-factor identification.
Stay Up-to-Date on Legal News With Hammerle Finley Law Firm
Hammerle Finley Law Firm is here to keep you updated on legal news that could affect you or your estate plan. If you’re concerned about any of these changes, schedule a consultation today.
Stay alert out there. Change is in the air.
Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship, and contested litigation. She may be reached at legaltalktexas@hammerle.com. This blog contains general information only and does not constitute legal advice.
