Here we have provided a “cheat sheet” to keep in mind for 2021 federal estate, gift and GST exemptions, as well as exemptions and inheritance tax consequences in specific states where a number of our clients reside.

Federal Estate, Gift, and GST Tax

Below is a summary of the current federal estate, gift, and generation-skipping transfer tax provisions for 2021. Note that, under current law, the increases in exemption amounts that began in 2018 are set to expire in 2026, at which point they will revert back to the pre-2018 numbers (i.e., $5,490,000 per person, indexed for inflation).

Gift and Estate Tax Exemptions

  • Single: $11,700,000
  • Married: $23,400,000
  • Rate: 40%

Gift Tax Exemption[i]

  • Single: $11,700,000 (unified with estate tax exemption)
  • Married: $23,400,000
  • Rate: 40%
  • Annual Exclusion Amount: $15,000
  • Exclusions for medical and educational expenses paid directly to provider

Generation-Skipping Transfer Tax Exemption

  • Single: $11,700,000
  • Married: $23,400,000
  • Rate: 40%

State Estate and Gift Tax

States vary in whether and how they tax transfers of property. A gift tax is imposed on property transferred while the donor is still alive. Estate taxes and inheritance taxes are imposed on the transfers of property after the decedent’s death. Below is a summary of estate, gift and inheritance tax laws for residents of the following states:

STATE GIFT TAX ESTATE TAX INHERITANCE TAX TOP RATE EXEMPTION AMOUNT
New York No[1] Yes No 16% $5,930,000[2]
Connecticut Yes Yes No 12% $7,100,000[3]
New Jersey No No Yes, if inheritor is someone other than decedent’s spouse, ancestor, descendant, or stepchild. 16% N/A
Pennsylvania No No Yes, if inheritor is someone other than decedent’s spouse, or parent (if decedent 21 or younger). Depends on inheritor’s relationship with decedent[4] N/A
Maryland No Yes Yes, inheritor is someone other than decedent’s spouse, descendant, descendant’s spouse, ancestor, stepchild, stepparent or sibling. Estate tax: 16%

 

Inheritance tax: 10%

$5,000,000
Washington, D.C. No Yes No 16% $4,000,000[5]

California, Florida, Virginia and Wisconsin do not have estate, gift or inheritance tax.

[1] However, gifts made within 3 years of death are pulled back into estate to calculate NYS estate tax.
[2] But subject to “NYS cliff” for taxable estates exceeding 105% of exemption amount.
[3] CT gift and estate tax is unified, so that lifetime gifts deplete exemption available at death.  Exemption amount will increase to $7.1M in 2021, $9.1M in 2022, and match the federal exemption in effect in 2023.
[4] 4.5% for descendants, 12% for siblings, 15% for all others.
[5] From 2022 onward, the exemption amount will increase annually in accordance with the cost-of-living adjustment provided in the D.C. Code.
Wealthspire Advisors LLC is a registered investment adviser and subsidiary company of NFP Corp.
This material was created by Wealthspire Advisors LLC. This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. © 2021 Wealthspire Advisors

Nicole Hart, J.D.

Nicole Hart is head of our trusts & estates department and works in our Westport, CT office.

Richard Yam, J.D.

Rich is senior vice president of trusts & estates, and is based in our New York office.