Gifting and Your End-Of-Year Estate Plans

As the holiday season is in full swing you may be considering what gifts to give your family members. However, there have been many changes this year that could make it possible for you to give the gifts you want without having to worry about some of the tax consequences when tax season approaches. 

Here’s more about how you can implement a tax planning strategy so you can gift as you hoped to without harsh implications.


The Gift Tax Exemption

The Internal Revenue Service (IRS) is increasing the gift and estate tax exemption from $12,060,000 to $12,920,000 for 2023. This is an increase of $860,000. This total amount is the amount that you are able to gift throughout the course of your lifetime. 


Gifting opportunities could include real estate interests, closely held businesses, or even cash. However, it is important to take action now, as the gift and estate tax exemption will decrease in 2026 to approximately $6,500,000.


In the hopes of utilizing the minimum tax and exemption, many estate planning techniques can be used to transfer or shift assets at a low-interest rate. However, since interest rates are continuing to rise with inflation, you should plan for higher returns on investments for your gifting goals to be achieved.


Additionally, there are estate planning strategies that can be used to achieve your gift plan and goals since higher interest rates are going to decrease the value of your interests and future cash flows from transferred assets that are likely to be taxed. This will reduce the size of the gift. Here are a couple of these strategies:


Qualified Personal Residence Trusts

Utilizing a Qualified Personal Residence Trust (QPRT), you can transfer your residence into a trust to be transferred to specific family members while retaining the use of the property for a set amount of time. 


Then, once the trust term ends, you can continue to live there while leasing or choose to vacate the property. The amount of the gift tax in this case would be based on the value of the remaining interest that was transferred to the trust. This is based on the current value of the property. This means that when interest rates are higher, the transfer value will decrease, reducing your gift or estate tax.


Charitable Remainder Trusts

You could also utilize a Charitable Remainder Trust (CRT), which involves transferring your assets to the trust without requiring any gift tax. Then, a percentage of the value of the assets within the trust is distributed to a non-charitable beneficiary. 


Then, once the trust term ends, any amount remaining will be transferred to the charity. Since CRTs are tax-exempt, if the assets transferred are sold, the gains will not be taxed but instead allocated overtime as distributions come in.



You should be able to gift as you wish without worrying about the potential tax consequences. When you want to set your estate plans up for the holiday season, do not hesitate to contact an estate planning lawyer at White Oak Wills for a confidential case review today. To get started, fill out our secured contact form or call our office at (503) 928-8664.

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White Oak Wills & Trusts, LLC

At White Oak Wills, we believe that everyone deserves a high-quality estate plan that will meet their unique needs. Our team has years of experience working with families to create personalized plans that take into account their goals and concerns for the future. Whether you need a simple will or a comprehensive plan that includes powers of attorney, guardianships, and trusts, our team can help you develop a plan that aligns with your goals and ensures that your loved ones will be well taken care of.

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