Beginning in 2019, the lifetime estate and gift tax exclusion (which is indexed for inflation) is projected to rise to $11.4 million, up from $11.18 million in 2018. This is the limit on tax-free wealth transfers during one’s lifetime or at death. As a result, couples who have not yet made any lifetime gifts will be able to avoid estate taxes if their combined estate is less than $22.8 million. Importantly, it may be necessary for a surviving spouse to file an estate tax return for his or her deceased spouse in order to take advantage of this combined exclusion amount.
The annual gift tax exclusion will remain at $15,000, the same amount as it was in 2018. So, for 2018 and 2019, you can make a gift of $15,000 to as many people as you like without it counting against your lifetime estate and gift tax exclusion. Spouses can combine their annual exclusions to gift a combined $30,000 to an unlimited number of recipients.
In addition to this annual tax exempt amount, taxpayers can make non-taxable gifts to pay for tuition, dental, and medical expenses for anyone they choose. However, the payments must be made directly to the provider of the service – they don’t count as non-taxable gifts if they are made as reimbursements.
If you have questions about how these rules may apply to you, please contact us and we’ll be glad to help.
Horizon Wealth Advisors is a Houston based fee-only fiduciary advisor. We specialize in helping successful individuals and families understand, organize, and manage their often complex financial situations. Horizon offers integrated financial planning and investment management services.