Under the current estate tax law, all persons have an estate/gift tax credit equivalent of $13,990,000 (2025) of property, which can be transferred to others prior to death without the payment of any gift taxes. Any lifetime transfer will reduce the estate tax exemption. The tax rate for transfers in excess of the exemption is 40% of fair market value. In 2025, the annual exclusion per year has increased from $18,000 (2024) to $19,000 (2025) per year. This is the dollar amount that can be gifted without utilizing your lifetime gift/estate tax exemption.
On July 3, 2025, Congress passed OBBBA 2025, which is the tax-and-budget reconciliation package for the current fiscal year 2025 and for the next nine fiscal years (through 2034). President Trump signed the enacted Bill on July 4, 2025. The only federal and gift tax change in OBBBA 2025 is a slight but permanent increase in the maximum lifetime exclusion amount (lifetime exemption) that any U.S. citizen or resident can use to shelter gifted assets or assets passing at death from the federal gift tax or federal estate tax. The new exclusion is $15 Million Dollars for a single person ($30 Million for a married couple).
OBBA 2025’s increased the basic exclusion amount for 2026 and future years, and has reset the base year to be 2025 for future inflation adjustments after 2026. The increase in the basic exclusion amount to $15 million for 2026, and with further inflation-indexed increases after 2026, is “permanent” in the sense that no automatic sunset or expiration date has been added. Therefore, the increased basic exclusion amount will not be decreased in any future year unless a future Congress and President enact and sign future legislation to specifically scale back or change the exclusion amount. However, a future Congress and a future administration could enact new legislation that would repeal or reduce the increase in the basic exclusion amount for individuals dying or making gifts after the effective date of the new legislation.
If an individual has already used up most or all of their lifetime exclusion amount (which in 2025 is a maximum of $13,990,000) by making taxable gifts, the increase to $15 million for 2026 means that this individual will have an unused exclusion to use in 2026 and later years to shelter gifts from the gift tax. If your assets exceed approximately $30 million, then maximizing the use of the current $13,990,000 exemption should be considered.
The most common strategy used to capture the current exemptions is to gift appreciating assets to an irrevocable trust for the benefit of a spouse, children, and grandchildren. Some other strategies to consider are as follows:
The basic concept in each of these planning techniques mentioned above are to move assets that are currently subject to estate tax to beneficiaries (or trusts for beneficiaries) that are not subject to estate tax. All future appreciation of the transferred assets would also not be subject to estate tax.
Please contact us to discuss your specific needs and planning opportunities, if you believe because of your net worth, your family would benefit from any of the planning techniques mentioned above.
Therrel Baisden, LLP has served families and their closely held businesses since 1925. If you want greater legal protection to safeguard your future, call us to schedule an appointment. We are conveniently located at the SunTrust International Center in downtown Miami.
