How to Maximize Your Wealth Using Gift & Estate Tax Exclusions?
Gift & Estate tax rules have been changed recently in the US. In this blog, we have tried to discuss all the important aspects one needs to learn in order to manage these aspects. Read the full write-up to learn more.
Federal gift and estate tax exemptions are at all-time highs, and this presents an extraordinary opportunity to wealthy families, particularly those owning property in uber-expensive states such as California, to pass and protect such assets.
The percentage of these cushy exemptions, however, will decrease greatly in 2026, and thus it is crucial to plan early. This blog presents the existing rules, their impacts on Californians, and wise steps one can take before the window closes. Look for a sales tax attorney who can help.
Current Gift and Estate Tax Exclusion Laws
In 2024, the exemption of federal estate tax is 13.61 million for individuals or 27.22 million for married couples. The exclusion under the annual gift tax increased to $18,000 per donee, and the lifetime gift tax exemption is equal to the estate tax exemption. Although there is no state-based estate tax in California, its citizens should set about planning around federal estate tax requirements.
How Does It Matter?
Homes in places such as Los Angeles, San Francisco, and Silicon Valley are quite expensive; thus, wealthy Californians outlying estates that extend to the federal exemption levels.
a. The high exemption is a short-term strategy that gives individuals the opportunity to pass on real estate, businesses, and investments duty-free--however, that changes in 2026 when it reduces to approximately 6 - 7 million dollars per individual.
b. Although California does not have any estate tax, there are quirks.
c. Proposition 19 has the potential to provoke property taxes, and federal regulations require careful planning so as not to lose millions in taxes.
d. It will be necessary to act early so that one will have retained wealth and reduce the taxes that will be paid in the future by heirs.
Some Common Impacts We Will Have
Homes in places such as Los Angeles, San Francisco, and Silicon Valley are quite expensive; thus, wealthy Californians outlying estates that extend to the federal exemption levels.
1. The high exemption is a short-term strategy that gives individuals the opportunity to pass on real estate, businesses, and investments duty-free--however, that changes in 2026 when it reduces to approximately 6 - 7 million dollars per individual.
2. Although California does not have any estate tax, there are quirks. Proposition 19 has the potential to provoke property taxes, and federal regulations require careful planning so as not to lose millions in taxes.
3. It will be necessary to act early so that one will have retained wealth and reduce the taxes that will be paid in the future by heirs.
Key Strategies You Can Follow to Maximize the Exemptions
a. Families ought to tap into the gift exemption of 13.61 million before it declines in 2026 to cut down on the prospective estate taxes.
b. Maximizing tax-free transfers will be possible with the help of such strategic tools as trusts, family LLCs, and charitable vehicles. Hiring tax law firms in Los Angeles might get you better results.
c. In California, the issue of planning under Prop 19 is also a significant factor behind the prevention of the property tax reassessment as costly.
The high exemptions that are in place now are temporary, and Californians who are looking forward to big estate taxes should act as early as 2026 to save some tax. Get advice from an expert in estate planning to safeguard the future of your family.
