Which tax exclusion do you use?

This caused some people to worry. If they use a gift exclusion that totals, say, $11 million and then the owner of the estate dies after 2025, would the estate use the pre-2025 $11 million exclusion or the post-2025 $5 million (adjusted for inflation) exclusion?

That’s the problem the IRS addressed: Would an estate have to pay more after the law reverts to 2017 levels?

The answer is no. The IRS won’t penalize an estate for using the exclusion. A newly issued special rule states that an estate can use the greater exclusion: One used for a gift during life or for an estate after death.

This ruling affects federal taxes. California has no state gift or estate tax, nor does it have an inheritance tax, which is paid by those who receive money from an estate.

Philip J. Kavesh
Helping clients with customized estate planning guidance and trust & estate administration for over 44 years.
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