Jan 4, 2021

Estate, Gift, and Generation Skipping Transfer Tax Exclusion Amounts for 2021

By Jordan M. Wassel, Esq.

The federal applicable exclusion amount for estate, gift, and generation skipping transfer tax purposes was $11,580,000 per person in 2020. This figure increased to $11,700,000 in 2021.

This applicable exclusion amount represents the total amount of property that an individual may pass to anyone, through lifetime gifting and upon his or her death, without the imposition of a federal estate, gift or generation skipping transfer tax.

Additionally, the concept known as “portability” will still apply in 2021. Portability allows any unused portion of the applicable exclusion amount of the first spouse to die to be used law by the surviving spouse for gift or estate (but not for generation skipping transfer) tax purposes. For example, if the first spouse to die uses only $1,700,000 of his or her $11,700,000 exclusion amount, then the surviving spouse would have $21,700,000 available for his or her exclusion amount, i.e. his or her own $11,700,000 plus the unused $10,000,000 from the estate of the first spouse to die. 

While the applicable exclusion amount increases for 2021, the annual gift tax exclusion amount remains at $15,000. This exclusion amount allows individuals, in 2021, to gift up to $15,000 to each of an unlimited number of individuals, without the imposition of a gift tax. Any aggregate annual gift exceeding $15,000 to any one individual will necessitate the filing of a gift tax return (Form 709) and will reduce the individual’s federal applicable exclusion amount by the overage. Similarly, aggregate contributions to an individual ABLE account are also limited to $15,000 in 2021.

If you have any questions or require additional information, please contact any member of Schenck Price’s Tax, Trusts and Estates Practice Group.

DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.