Estate and Gift Tax Basics -2022 Edition - YouTube

Hi my name is Dan Krause and today I want to  talk about estate taxes and what does it cost  

to give someone something either during  your life or after you've passed away.  

But first I want to remind you if you'd like to  get a hold of our newsletter you're very welcome  

and you can get on our newsletter list by emailing  [email protected]. So my name is Dan Krause.  

I have an estate planning and elder law firm  in Wisconsin. I'm also licensed in Illinois and  

Minnesota. Today let's get to the question, 'What  does it cost me to transfer assets on my death  

or during my lifetime?' So that is a question  that involves taxes and estate taxes and also  

the associated gift tax. So estate taxes are the  tax that is levied on something that's transferred  

from a deceased person to a living person and  different states have different estate taxes and  

and I'm going to be talking about Wisconsin and  the federal. So in Wisconsin we're very lucky  

that there is no estate tax. There used to be  but now there is not effectively any estate tax  

in Wisconsin so we just go by the federal so  I'm going to concentrate that on the federal.  

So in order for your estate to have an estate  tax on it currently there's an exemption amount  

and that is 12.06 million dollars in 2022.  That's been going up since 2017 I believe it is  

when they change the law. So that you  when you pass away you can pass up to  

12.06 million dollars without any estate tax.  That includes real estate investments, IRAs, 401ks  

also though it includes life insurance and any  other intangibles like patents or trademarks and  

all that. The value of everything that you pass  is included in the estate tax taxable amount.  

If that value is less than 12.06 million  dollars then you are in good shape.  

There's no estate tax there's no tax to be  paid — people inherit from you tax free.  

That's great news and in fact that is the  case for more than 99 percent of people  

who pass away — they have less than that as  far as their assets go. The estate tax law  

is associated very closely with the gift tax law.  If you give away more than 12.06 million dollars  

this year then that will be taxed anything  over that will be taxed by 40 percent.  

Also it would eliminate the your ability to give  anything on death without a tax because the gift  

tax if you if you have a gift tax it also means  that you're going to have an estate tax because  

you only get the 12.06 to give away during  your whole lifetime or at death so if you've  

already given away during your lifetime  now you don't get the exemption at death.  

So the estate tax is a movable kind of an object.  It's going up according to inflation right now  

but the current law that we have has a  sunset provision so it's a temporary law.  

The sunset provision is going to sunset  in the end of 2025. So on January 1st  

2026 the estate tax is going to go down again  or the exemption sorry the tax won't go down  

the exemption will go down to about 6 million  dollars. We don't know exactly what that will  

be because we don't know what the cost of  limiting increases are going to be but it is  

it should be right around 6 million dollars.  6.2 is somebody's guess some people say as  

high as 7 million but in any case unless Congress  changes it the estate tax exemption is going to be  

about half of what it currently is. So people who  have between 6 and 12 million dollars currently  

or think that they may die with between 6 and  12 million dollars it's going to affect them.  

Even so we still have less than one percent of  people who will die in a situation where they  

have more than 6 million dollars. Many  of my clients come to me and they ask,  

'Well what's it going to cost in taxes to transfer  my house to my children?' and the answer is not  

going to cost anything because the fact that  you don't have millions of dollars in this case  

you can transfer as many assets  as you want. Now if you transfer  

during your lifetime there are certain drawbacks  to that but one of them is you may have to pay  

you may have to pay to have a gift tax return  prepared. Now that's not the same as paying a  

gift tax but anytime you give one person more than  16 thousand dollars in any calendar year you have  

to file a gift tax return to tell the government  hey I gave more than 16 thousand dollars  

and what they do with that information is they  take whatever amount you gave above 16 thousand  

and they subtract it from that 12 million that  you can give at death. So that if you give a a  

million dollars away this year the government's  going to note that down and keep track of that  

because you're going to file the gift tax return  and then on your death they're only going to let  

you give away 11 million instead of 12 because  you've already used up some of your exemption by  

giving a gift. So that is just a little  bit about estate and gift taxation.  

Hopefully that has cleared up some misconceptions  about attacks being levied on all estates or all  

gifts that you make most of the time it's not.  So please if you have any questions about this or  

concerns please give us a call we'd be happy  to answer questions 608-268-5751. Thank you.