Year-End Estate Planning For 2022

According to Bloomberg, nearly 2,600 estates paid $18.4 billion in estate taxes in 2021, nearly double the amount paid to the IRS in 2020. Fortunately, periods of market volatility and uncertainty present estate planning opportunities. The gift tax, estate tax and generation-skipping transfer tax are all imposed on the fair market value of assets at the time of transfer. In a bear market, lower valuations allow you to leverage your exclusions and exemptions, freeze the current lower prices of assets and pass on any future appreciation to the next generation. How can you take advantage?

• The gift tax annual exclusion allows you to give $16,000 ($32,000 for married donors) to as many individuals as you choose. In 2023, the annual exclusion is inflation-adjusted to $17,000/$34,000. It is better to make your gifts early in the year, to move more appreciation and income to your beneficiaries and to ensure the gifts are made during your life.