Starting in 2026, the lifetime gift and estate tax exemption remains unified and will be $15 million for single fillers and $30 million for spouses and then indexed for inflation.  This means that this is an amazing time gift or transfer assets free of federal estate taxes to your intended beneficiaries.  Like many of our clients, gifting assets without any controls doesn’t excite them to make these completed gifts.  However, when we gift or transfer assets or property including business interests and other valuable assets, we always incorporate a type of irrevocable trust.  Gifting into a trust as opposed to an individual person allows that gift to carry on and pass free of federal estate taxes for 365 years.  Gifting into trusts also allows parents to gift non-voting membership interest or limited partnership interests which enables them to retain control over the management and distribution of the assets or property.  In other words, parents can give millions in Trust to their children without their children ever receiving a penny while the parents are alive.  However, when we shift or transfer assets clients frequently desire to shift federal income tax liabilities as well spreading this income over several families rather than just the parents’ Form 1040.  

Lifetime gifting enables clients to take advantage of the high federal estate tax deduction amount immediately.  By shifting this net worth, you also capture all the growth of these appreciating assets and never pay any federal estate taxes on this gift.  Meanwhile, the downside to gifting now means that upon the death of the first spouse to pass away all the growth and appreciation does not receive a step-up in basis for federal income taxes.  This means that when you gift appreciated assets and property the benefactor receives the gifted asset and property at the same cost basis as the giving party.