What is a Lifetime Gift Tax Exemption?
Have you been taking advantage of the annual gift tax exclusion, or are you planning to do so in the future? For individuals or married couples in Connecticut with larger estates, the gift tax exclusion is often a helpful way to give assets to family members and other beneficiaries without incurring tax, and while minimizing potential federal estate taxes later on. In 2026, the annual gift tax exclusion is $19,000 per recipient. As such, you can give up to $19,000 (or $38,000 for a married couple) to as many recipients as you wish during the 2026 calendar year. That could mean you gift only $19,000 this year to one recipient, or that you take advantage of the way the gift tax exclusion works and gift almost $1 million total to 50 or more recipients.
Depending on the total value of your estate and the number of recipients to whom you are gifting up to the annual exclusion amount every year, you may need to pay attention to the lifetime gift tax exemption. What is the lifetime gift tax exemption and how does this work?
Unified Lifetime Gift and Estate Tax Exemption Under Federal Law
You may know that the One Big Beautiful Bill (OBBB) raised the federal estate tax exemption to $15 million. What you may not realize, however, is that this is an exemption that also includes a lifetime gift tax exemption. The total amount is $15 million, a unified exemption that includes both the lifetime gift exemption and estate tax exemption. What does this mean for you if you have been giving gifts to many people or entities each year up to the annual gift tax exclusion amount?
Any gift beyond the annual exclusion amount counts toward the lifetime exemption. The total amount of such gifts over time in effect reduces your estate tax exemption. Gifts made only up to the annual exclusion amount will not impact your lifetime exemption amount.
Connecticut Has Its Own State Gift and Estate Taxes
For Connecticut residents, it is crucial to know that Connecticut is among a somewhat small number of states that has a state gift tax and estate tax.
The exemption amounts mirror the federal exemption amount, which means $15 million for 2026. The exemption amounts in previous years were lower, however. If you have questions about how state taxes will impact your estate, and your plans for gifting assets, you should discuss them with an estate planning lawyer who handles estate planning matters in Connecticut.
Contact a Canton, Connecticut Estate Planning Attorney for Assistance with Minimizing Your Gift and Estate Taxes
When you have a large estate and want to ensure that your loved ones and other beneficiaries receive all of your assets as fully as possible without having those assets reduced by federal or state taxes, it is critical to seek legal advice from an experienced Canton estate planning lawyer at the Law Office of Brian S. Karpe. We can speak with you today to learn more about the details of your estate, and we can begin working with you on various estate planning strategies to minimize taxes and to ensure that your assets, as fully as possible, go to the beneficiaries of your choosing. Contact our firm to learn more about how we can assist you and about the broad estate planning services we provide in Connecticut.
Source:
irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax
