The annual gift tax exclusion in 2025 provides people with a great opportunity to minimize the portion of your estate that is taxable by using gifts in various ways. If you aren’t careful and make a large gift without considering the consequences, you could trigger a taxable event. Thankfully, using the annual gift tax exclusion can help you get around that.Â
The annual gift tax exclusion is an amount, adjusted annually for inflation, that gives individuals the ability to give certain assets or money to someone else without incurring any of their federal gift taxes or using the gift tax exemption or lifetime estate exemption.Â
In 2025, this amount has been increased to $19,000 from the prior year of $18,000. This is a gift you can make per recipient per year and usually adjusts from one year to another. If you’re thinking about how to maximize your gifting in 2025 and haven’t made any gifts yet, this can be a valuable strategy for estate planning purposes.Â
Using this gift tax exclusion could strategically lower your taxable estate over time. There are several benefits to making a gift to an irrevocable life insurance trust, such as asset protection, estate tax reduction, and control over disbursements. Similarly, making a gift to an intentionally defective grantor trust can offer benefits such as asset protection, freezing your estate value, or valuation discounts.
Because of the complexities associated with these estate planning strategies, it is best to work with a qualified estate planning attorney in Pasadena to identify your opportunities and select the right type of trust for you. Contact our lawyers to learn more about your options and to discuss creating or revising your own plan.Â
