Gift tax and estate tax are actually the same thing–federal wealth transfer tax. US citizens are allowed to give away up to $11.7 million (the $10 million exemption amount adjusted for inflation) during their life or upon their death. Under current law, the exemption will return to half of this amount in 2026. Once you give away this amount, all other gifts are subject to a wealth transfer tax, with the exception of $15,000 annual exclusion gifts and certain qualifying gifts where you are directly paying someone else’s medical or educational expenses.
If your assets are near or above the exemption amount, a knowledgeable estate planning attorney may be able to help you legally minimize your transfer tax liability with strategic planning. There are gifting strategies, as well as special types of trusts, that may be able to help you minimize transfer tax obligations over the long term.
