New Year Tax Update

I hope that everyone had a wonderful holiday season. Before I get into the recent updates on estate tax law changes, I would like to take a moment and thank our clients, referral partners and team for helping make 2021 our most successful year yet. Canarick & Canarick is a small firm that does not advertise its services. Our business stems from the relationships we have created with all of you. We do not take for granted the trust that you place in us, and we look forward to continuing to work with each of you for years to come. Also worth noting, we recently upgraded our website: Canarick & Canarick so please check it out if you get a chance.

The tax updates this year are very minor. Although it appeared on multiple occasions that there was going to be a major overhaul of the estate tax system, the only updates for me to share are the usual inflation adjustments that occur each year…

• For an estate of any decedent dying during calendar year 2022, the applicable exclusion is increased from $11.70 million to $12.06 million. This change increases not only the applicable exclusion amount available at death, but also a taxpayer’s lifetime gift applicable exclusion amount and generation skipping transfer exclusion amount. For those of you who used your entire $11.70 million gifting applicable exclusion amount in 2021, you now have the ability to gift another $360,000 out of your estate. If no new tax law is passed, the increased exclusion amounts are scheduled to expire on December 31, 2025, which would mean a reduction in the exclusion amounts to $5 million (plus adjustments for inflation). Of course, we still could get a new tax law prior to that. I will continue to keep everyone updated if anything changes.
• The estate, gift and generation skipping transfer tax rate remains the same at 40%.
• The gift tax annual exclusion is increased from $15,000 per beneficiary to $16,000 per beneficiary.
• The New York exclusion is increased to $6.11 million (up from $5.93 million in 2021).
• The Connecticut estate and gift tax applicable exclusion amount is increased from $7.1 million to $9.1 million in 2022. This amount is scheduled to meet the Federal estate and gift tax exclusion amount in 2023.
• New Jersey and Pennsylvania continue to have no estate tax, however, both states do have inheritance taxes. While the New Jersey Inheritance Tax only applies when assets pass to someone other than a spouse, parent, child, grandchild, etc., the Pennsylvania Inheritance Tax applies to all beneficiaries, other than spouses and minor children (i.e. children under the age of 21).

As always, please feel free to reach out with any questions or to schedule a review of your estate plan.

Wishing you and yours a safe, healthy, and prosperous new year!

Mike

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This article was written by an independent third party. It is provided for informational and educational purposes only. The views and opinions expressed herein may not be those of Guardian Life Insurance Company of America (Guardian) or any of its subsidiaries or affiliates. Guardian does not verify and does not guarantee the accuracy or completeness of the information or opinions presented herein. 2021-127125 Exp 09/23