Private Clients Alert: 2023 Estate Planning Update
January 30, 2023
This client alert summarizes 2023 inflation adjustments relating to gift, estate and generation-skipping transfer (“GST”) tax exemptions and exclusions.
Of particular note is an $860,000 increase in each of the gift, estate and GST tax exemptions, bringing the exemptions to $12.92 million each. These historically high exemptions are, however, likely temporary: they are scheduled to be reduced by roughly half in 2026. Clients who have not already used their full gift and GST tax exemptions may wish to consider the gift planning techniques described in our Overview of Lifetime Gift and GST Tax Planning.
Because some of the techniques discussed in the memorandum involve multi-year planning, we recommend that clients who are interested in making further gifts call us to discuss gift-giving opportunities at their earliest convenience.
Annual exclusion gifts
The annual exclusion for 2023 has increased from $16,000 per donee to $17,000 per donee (or $34,000 per donee for married couples who split gifts).
For gifts to a non-citizen spouse, the annual exclusion has increased from $164,000 to $175,000.
As always, we recommend that annual exclusion gifts be made early in the calendar year.
Federal gift, estate and GST tax exemptions
As noted above, the Federal gift, estate and GST tax exemptions have increased from $12.06 million to $12.92 million ($25.84 million for married couples who split gifts).
These exemptions will continue to be indexed for inflation in 2024 and 2025, but they are scheduled to be reduced in 2026 to $5 million, indexed for inflation from 2010.
New York estate tax exemption
The New York estate tax exemption has increased from $6,110,000 to $6,580,000.
Connecticut gift and estate tax exemptions
The Connecticut gift and estate tax exemptions have increased from $9.1 million to $12.92 million and will continue to match the Federal exemptions going forward. Prior to this increase, Connecticut residents who wanted to utilize the full Federal gift tax exemption would have had to pay a Connecticut gift tax.