Federal Estate and Gift Tax Exemption:

The IRS announced the official estate and gift tax limits for 2019 late in November of 2018. The federal estate/gift tax exemptions for an individual increases to $11.4 million, up from $11.18 million in 2018. This means an individual can gift or leave up to $11.4 million dollars to heirs and pay no federal estate tax. With portability, a married couple can transfer up to $22.8 million dollars at death and/or through lifetime gifts. The top marginal federal estate tax rate is 40%. It is important to note that these increased exemption amounts are set to expire at year-end 2025.

Annual Gift Tax Exclusion:

For 2019, there is no change to the $15,000 annual gift tax exclusion. The annual gift tax exclusion allows individuals to gift up to $15,000 per recipient, in any given year, without having it count against their gift tax exemption. Married couples can gift up to $30,000 per recipient. If a gift to an individual exceeds the exclusion amount a gift tax return must be filed.

Minnesota Estate Tax Exemption:

For Minnesota residents, starting January 1, 2019, the state estate tax exemption increases from $2.4 million to $2.7 million. This means individual passing in 2019 can leave up to $2.7 million and their estates will not be subject to Minnesota estate tax. The top marginal estate tax rate will remain unchanged at 16%. Of note, there is no applicable portability rule under Minnesota law, meaning that married couples with estates exceeding the exemption amount will require tax planning in their estate plans to limit exposure to the Minnesota estate tax.