Another year is coming to an end in Massachusetts. With the beginning of 2020, certain parameters and maximums are changing regarding estate and gift taxes. Among these are new limits on estate and gift amounts. Both provide important tools for estate planning.
The exempt amount on estate and gift taxes will again increase in 2020. The 2019 limit was $11.4 million and it is increasing to $11.58 million in 2020. These are the individual amounts. A couple’s exemption will be $23.16 million in 2020. The implication of this is that a couple can leave up to $23.16 million in their will and the recipients will not owe an estate tax on that amount.
The amount that can be given annually remains at $15,000. However, that amount can be given by each parent and can be given to multiple people. For example, grandparents could choose to give each of their four grandchildren $15,000 and no estate tax would be due. Likewise, each grandparent could gift each grandchild $15,000 for a total of $120,000.
Some people in Massachusetts may wish to allow their heirs to benefit from an estate while the benefactors are still alive by gifting money for things like college, a wedding or as a down payment on a house. In addition to being able to see one’s heirs enjoy the gift, one can protect assets from future tax. A person interested in exploring these options should talk to an experienced estate planning attorney. A knowledgeable lawyer will be familiar with the details of the new law and can advise the client on the options available regarding gifting money and reducing estate taxes.