Here we have provided a “cheat sheet” to keep in mind for 2020 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 2020. 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: $11,580,000
  • Married: $23,160,000
  • Rate: 40%

Gift Tax Exemption[i]

  • Single: $11,580,000 (unified with estate tax exemption)
  • Married: $23,160,000
  • Rate: 40%
  • Annual Exclusion Amount: $15,000
  • Exclusions for medical and educational expenses paid directly to provider

Generation-Skipping Transfer Tax Exemption

  • Single: $11,580,000
  • Married: $23,160,000
  • 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[i] Yes No 16% $5,850,000[ii]
Connecticut Yes Yes No 12% $5,100,000[iii]
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[iv] 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% $5,681,760 in 2019[v]

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

 

[i] However, gifts made within 3 years of death are pulled back into estate to calculate NYS estate tax.
[ii] But subject to “NYS cliff” for taxable estates exceeding 105% of exemption amount.
[iii] 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.
[iv] 4.5% for descendants, 12% for siblings, 15% for all others.
[v] As of the date of this post, 2020 exemption amount not yet published but increases annually in accordance with the cost of living adjustment provided in the D.C. Code.
[i] The federal estate and gift taxes are unified, which means that gifts utilizing exemption during life will deplete the amount of exemption available at death.
Wealthspire Advisors is the common brand and trade name used by Sontag Advisory LLC and Wealthspire Advisors, LP, separate registered investment advisers and subsidiary companies of NFP Corp.
This information should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The commentary provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Wealthspire Advisors cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use. © 2020 Wealthspire Advisors

Nicole Hart, J.D.

Nicole Hart is head of our trusts & estates department and works in our New York office.

Richard Yam, J.D.

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