Can your gifting program benefit from defined-value gifts?
Abstract: It’s no surprise that many individuals are making substantial gifts to their family members to take advantage of the current federal gift and estate tax exemption. Indeed, the 2022 exemption of $12.06 million is the highest amount it’s ever been. But absent action from Congress, the amount will drop to an inflation-adjusted $5 million in 2026. If a person’s estate consists of hard-to-value assets, making gifts of these assets can be risky. If the IRS later determines that the gifts were undervalued, gift tax (plus interest and possibly penalties) may result. This article explains why making defined-value gifts can help avoid unexpected tax liabilities.