This article was first published on www.jdsupra.com
In Revenue Procedure 2021-45 (RP-2021-45 (irs.gov)), the Internal Revenue Service announced annual inflation-adjusted tax rates for 2022, including provisions concerning estate and gift taxes.
Beginning in 2022, the annual gift exclusion will be $16,000 per donor, up from $15,000 in recent years.
The unified credit against estate and gift tax in 2022 will be $12,060,000, up from $11.7 million dollars in 2021. This, of course, could remain subject to change.
As we discussed in more detail here, Congress previously proposed, as part of the Build Back Better Act, accelerating the sunset of the exemption to January 1, 2022, and essentially halving the exemption to an inflation-adjusted $5,000,000, or approximately $6,030,000. Importantly, that provision was removed and was not contained in the most recent versions of the legislative text of the Build Back Better Act passed by the House on November 19, 2021. However, it could be reinserted as the bill proceeds to the U.S. Senate and works its way through the reconciliation process.
Clients are strongly encouraged to continue to monitor this evolving situation on the estate and gift tax exemption and how it might impact their estate planning.
Kathy Brown van Zutphen is an attorney licensed to practice law in Alabama and Mississippi. She focuses on the “elder law” areas of trusts, estates, and conservatorships. Additionally, she litigates lawsuits and represents small business owners as part of her legal practice. You can also reach her at her office: (228) 357-5227.