Estate and gift tax exemptions growing this year
Q. What will the new estate and gift tax exemptions be in 2022?
A. In 2022, the amount each person can give away during their lifetime or at death increases from $11,700,000 to $12,060,000. A married couple can give away or leave double that amount, or $24,120,000, tax-free. Proposed legislation in late 2021 would have reduced the 2022 number by half, but the legislation did not make it into law.
Each year, you can also give away $16,000 in cash or other property to any other person without the gift being treated as a “taxable” gift that uses up that person’s $12,060,000 gift tax exemption. This annual exclusion from the gift tax is $1,000 greater than the $15,000 exclusion available in 2021.
For instance, if you are unmarried and you give a house valued at $316,000 to your daughter, the first $16,000 of the gift is excluded, and you will be treated as having made a “taxable” gift of $300,000. You will be required to file a gift tax return where you report the gift, and you will indicate on the return that you have used up $300,000 of your $12,060,000 lifetime exemption, thereby leaving you with a balance of $11,760,000 left to give away during your lifetime or at death. Q. What happens to a couple’s pre-existing assets in Texas when they get married? I own a townhouse with no mortgage. I have no children. If I were to marry in Texas, would my wife then own half of my townhouse?
A. Presently, you own your townhouse as your separate property. When you marry, you will continue to own it as separate property. Your wife would own no part of it. If your marriage ends in divorce, you will keep the townhouse. A judge cannot award any part of it to your wife.
However, without a marital property agreement that provides to the contrary, if you were to die before your wife, she would have the right to live in your townhouse rent free for the rest of her life.
If you have a will, you can state who gets the house when her life estate ends, but you can’t deny her the right to live there.
A surviving spouse’s right to a life estate in the other spouse’s home can be waived in a marital property agreement. You would need to convince your future wife that she needs to sign the agreement if she wants to marry you. It is possible for your future wife to sign this type of agreement after you are married, but you would presumably have a much more difficult time convincing her to sign if she is already married to you.
The information in this column is intended to provide a general understanding of the law, not legal advice. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances. Ronald Lipman of the Houston law firm Lipman & Associates is board-certified in estate planning and probate law by the Texas Board of Legal Specialization. Email questions to stateyourcase@lipmanpc.com.