2023 Estate Tax, Gift Tax, and Avoiding Probate

Although I shared these numbers at the end of last year, I want to be sure that you’re aware of these updates in case they impact you.

The federal government as an estate and gift tax. California does not. With that:

First, the federal annual exclusion for gifts increased to $17,000 per person for the calendar year 2023. This means a married couple can gift up to $34,000 to ANY other person without reporting it to the IRS.

Second, people who die in 2023 have a federal estate tax exemption of $12.92 million per person ($12,920,000). If both people in a married couple die this year, then the federal estate tax exemption is $25.84 million ($25,840,000) for that married couple. (See my recent post on portability for how this works. The surviving spouse uses the exemption amount of the deceased spouse based on the year the spouse died. To get this benefit, the surviving spouse will need to file a form 706 with the IRS.)

Third, and this is not new for 2023, but important to know! As of April 1, 2022, your California loved ones can still avoid probate via a small estate affidavit if they have less than $184,500 TOTAL assets when they die (previously $166,250). (Probate is state by state.)

If you have any questions or want to talk through any of this, contact me!