Curated by: Rubric Advisors
Estate & Legacy
The Lifetime Exemption
The federal lifetime exemption allows individuals to transfer up to $13.99M in 2025 tax-free through gifts or at death, with married couples able to combine exemptions for $27.98M total through portability.
The Lifetime Exemption
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Understanding Lifetime Exemption
- Federal gift and estate tax exemption allows tax-free asset transfers during life or at death
- 2025 exemption: $13.99M per person, $27.98M per married couple
- Only transfers exceeding the exemption amount trigger gift or estate taxes
- Tax rate of 40% applies to amounts above the exemption threshold
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Full Guide
Understanding Lifetime Exemption
- Federal gift and estate tax exemption allows tax-free asset transfers during life or at death
- 2025 exemption: $13.99M per person, $27.98M per married couple
- Only transfers exceeding the exemption amount trigger gift or estate taxes
- Tax rate of 40% applies to amounts above the exemption threshold
Portability for Married Couples
- Surviving spouse can inherit deceased spouse's unused exemption through portability
- Portability must be elected by filing IRS Form 706 within the filing deadline
- Combined exemption reaches $27.98M for married couples in 2025
- Filing Form 706 is recommended even if no estate tax is owed
Historical Exemption Growth
- Exemption increased from $675,000 in 2000 to current historic highs
- 2017 Tax Cuts and Jobs Act roughly doubled the exemption with inflation indexing
- Steady increases: $11.7M (2021), $12.92M (2023), $13.61M (2024), $13.99M (2025)
- Current exemption amounts represent all-time historical highs
Legislative Status and Planning
- The One Big Beautiful Bill Act made the elevated TCJA exemption permanent
- Exemption will continue to be adjusted annually for inflation
- Permanence provides greater certainty for long-term estate planning strategies
- Monitor for future legislative changes that could alter exemption levels
Key Takeaways
- Review gift and estate strategy annually to optimize exemption benefits
- File Form 706 to preserve portability, even when no estate tax is due
- Consider gifting strategies while exemption amounts remain at historic highs
- Work with an estate planning advisor to align your plan with current law
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