Silver Spring, MD asked in Tax Law for Maryland

Q: Hi Under the new gift tax laws 2018-2025 with a cap of 11.57 million lifetime gift exclusion amount...

If an estate is worth 10 million now, would it be better to gift half of the estate to avoid the 47% estate tax on anything over 5 million which the new law reverts to in 2026...or possibly sooner

Related Topics:
1 Lawyer Answer
Mark Oakley
Mark Oakley
  • Rockville, MD
  • Licensed in Maryland

A: Treasury Decision 9884 contains the final regulations on this issue, and include a special rule allowing the estate to figure its estate tax credit using the higher of the basic exclusion amount (BEA) applicable to gifts made during life or the BEA applicable on the date of death. So, if you give away up to $11.7 Million this year (the current BEA), and the BEA reverts to $5 Million (plus inflation adjustments that will push it to closer to $6 Million), then the estate can claim the BEA in effect this year since this was the year of the gift. Should the BEA be increased by then, however, then the estate can claim the increased exclusion amount. Whether in the end that is a good tax strategy or financial planning decision in your particular circumstances is something that requires a careful tax analysis and financial advice from a certified financial planner/advisor. There are other considerations beyond worrying about how your assets are taxed after you're gone.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.