Christopher S. Mulvaney,

Attorney and Counselor-at-Law

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THIS WEBSITE INCLUDES GENERAL INFORMATION & THE OPINIONS OF CHRISTOPHER S. MULVANEY. IT IS INTENDED TO STIMULATE A BASIS FOR QUESTIONS RELATED TO YOUR PARTICULAR FACTUAL CIRCUMSTANCES — BEFORE YOU ACT.  THIS WEBSITE DOES NOT CONSTITUTE LEGAL ADVICE. IF YOU WANT LEGAL ADVICE, PLEASE MAKE A ZOOM APPOINTMENT TO SPEAK WITH ME.

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Gonzaga University School of Law – Spokane, Washington – Class of 2002 – Cum Laude The Latin phrase “Deo patriae, scientiis, artibus” translates to “For God and country through sciences and arts”.  The initials A.M.D.G. on the seal of Gonzaga Law School stand for Ad Majorem Dei Gloriam, which is Latin for “For the Greater Glory of God” the Motto of the Society of Jesus (Jesuits): a Catholic religious order founded by St. Ignatius of Loyola.

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“And do as adversaries do in law –

Strive mightily, but eat and drink as friends.
– William Shakespeare: The Taming of the Shrew – Act 1 Scene 2

THE FEDERAL GOVERNMENT HAS A

LIFETIME UNIFIED GIFT & ESTATE TAX EXCLUSION

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In 2026, the IRS LIFETIME UNIFIED EXCLUSION AMOUNT FOR ESTATE AND GIFT TAX is $15 Million U.S. Dollars per person; ($30) Million U.S. Dollars per couple. In 2027, the Exclusion amount will be indexed to inflation, so it will increase at the inflation rate. If the inflation rate is 2%, that will add $300,000 to the Exclusion Amount. If inflation is 3%, that will add $450,000 to the Exclusion amount.

Reporting of the value of your Estate after you die above $15 Million per person is done on IRS Form 706 when the Successor Trustee files the Fiduciary Tax Return: IRS Form 1041.

The federal annual gift tax exclusion from reporting in 2025 is Nineteen Thousand ($19,000) U.S. Dollars. File IRS Form 709 if you give more than that amount to anyone other than your spouse in a year to report the gift. Tax is owed only above the exclusion amount by the giver of the gift, not the recipient, so many givers have a reporting requirement, but pay no tax. The gift is deducted from the Exclusion Amount.

For example is you gave $5 Million U.S. dollars to your children, then there would be no Washington State gift tax or reporting. There would be no Federal Tax, only reporting. A single person would deduct that $5 million from the $15 Million Lifetime Unified Exclusion Amount leaving $10 Million more that could be given during life and after death without owing any tax. A married couple would deduct the $5 million from the $30 Million Lifetime Unified Exclusion Amount leaving $25 Million more that could be given during life and after death without owing any tax.

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The Federal Estate Tax is an attempt to limit Dynastic Wealth. Only about the top quarter of the top 1% of U.S. Taxpayers are required to file IRS Form 706 – Estate (and Generation-Skipping Transfer) Tax Return. Only about the top tenth of the top 1% pay any Federal Estate Tax.

Here is a link to posts by Robert Reich

regarding the growing danger of Dynastic Wealth.

Here is more information from the International Consortium of Investigative Journalists.

The amount of revenue raised by the U.S. federal estate tax is relatively small compared to the overall federal budget. 

Key figures and insights:

• 2020: Estate and gift tax revenues totaled $17.6 billion.
• Minimal contribution to federal revenue: Over the past 50 years, the estate tax has consistently accounted for less than 3% of total federal revenues. In 2020, it raised just $17.6 billion out of $3.5 trillion in federal revenue, which was enough to cover only about a day’s worth of federal spending.
• Projections: The Congressional Budget Office (CBO) projected that, under current law, estate and gift tax revenues would total $21.6 billion in 2021 and rise to $49.5 billion in 2031.
• Impact of TCJA: The Tax Cuts and Jobs Act (TCJA) of 2017 doubled the estate tax exemption amount, leading to a substantial decrease in the number of estates subject to the tax and a corresponding drop in revenue.
• Projected increase after 2025: Estate tax revenues are projected to increase sharply after 2025, when the exemption amount is scheduled to revert to pre-2018 levels unless Congress takes action to extend them. 

In summary:

While the federal estate tax can generate substantial amounts of revenue from individual estates, its overall contribution to the total federal budget is quite small, especially since the changes made by the TCJA in 2017. However, with the scheduled sunset of these changes at the end of 2025, revenues from the estate tax are projected to increase in the coming years.

IRS Form 706, United States Estate (and Generation Skipping Transfer) Tax Return, is filed by only a small percentage of taxpayers. 

Here’s why and the available data:

• Filing threshold: Form 706 is required only when the gross estate of a decedent, plus their adjusted taxable gifts, exceeds the filing threshold for the year of death. This threshold is a substantial amount, set at $13.61 million per individual in 2024, and it is expected to increase in 2025.
• Small percentage of estates are taxable: Due to this high exemption, only a small number of estates are subject to the estate tax and require filing Form 706. For example, in 2021, the Tax Policy Center estimated that only about 6,200 estate tax returns were filed, and only about 3,500 of those were taxable.
• Comparison to total tax returns: In recent years, the total number of tax returns filed annually in the United States has been well over 100 million. For example, in 2022, about 153.8 million tax returns were filed. Comparing the number of Form 706 filings (around 6,200 in 2021) to the total number of tax returns filed (over 100 million) shows that the percentage of taxpayers who file Form 706 is extremely small, significantly less than 1%. 

In summary, historically, only a very small fraction of the total number of taxpayers have been required to file Form 706 due to the high estate tax exemption amount. The data available reflects this with thousands of Form 706 filings annually, while total tax returns number in the hundreds of millions. 

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Washington State residents can meet with me in Zoom/DocuSign from anywhere in the world, and I can notarize their electronic signatures because I am a remote online notary.  Just email me an image of your photo ID.