The state of California is one of the most taxed in the country when it comes to income taxes. But there is some good news for those concerned about estate taxes — the state of California is one of the states that does not charge an estate tax. To learn more about California’s transfer tax planning considerations for 2022, continue reading.
This year, the federal estate and gift tax exemption has been increased from $11.7 million to $12.06 million, allowing U.S. residents to give away an extra $990,000 in the aggregate to non-spouse family members without incurring federal estate and gift tax.
A tax exemption is a reduction in the amount of tax that is owed. This means that people will be able to give away or inherit more money without having to pay taxes on it. The increase in the tax exemption is designed to help people with large estates save money on their taxes.
This exemption was indexed for inflation in 2022.
There is an annual indexing of the GST exemption for inflation. As a result, each individual is now exempt from paying GST except the amount is over $12.06 million. This amount used to be $11.7 million in 2021.
This exemption is designed to help people who want to pass down their property or money to their children or grandchildren without having to pay taxes on it.
Its adjustment is based on “inflationary gains”.
With the “annual exclusion,” the IRS allows a donor to make an annual gift of a certain dollar amount to a non-charitable donee without depleting the donor’s gift or estate tax exemption. The yearly exclusion has also been raised from $15,000 to $16,000 this year to account for inflation.
As a result, a donor’s gift and estate tax exemptions can be used to make a gift of up to $16,000 to a donee. If you’re married, you may combine your yearly exclusions and give each donee up to $32,000. For those who want to pass on their money without incurring tax liabilities, annual exclusion gifts are a terrific option to consider.
Now is a good time to double-check your beneficiary designations on retirement accounts, life insurance policies, and other financial instruments to make sure they accurate. You may also have questions about how to properly adjust your estate plan. Learn more about our Estate Planning team – we are always available to answer any questions you may have.
We specialize in business and trust and estate law, and we can help you make the most informed decisions possible. Contact us today to learn more!
DISCLAIMER: This Advisor is one of a series of business, real estate, employment, estate planning and tax bulletins prepared by the attorneys at Fauver, Large, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution or use of this Advisor.
