People who have high-value estates often want to be able to pass as much as they can to their loved ones. Estate taxes are one thing that can significantly cut down on what your loved ones will receive if you have an estate that’s valued over a specific amount, which is $13.99 million for individuals who die in 2025.
One option that you have for trying to reduce the value of your estate without your loved ones losing some of their inheritance is paying down your estate. You can do this through gifting, but these gifts must be handled properly or you risk triggering the gift tax.
How must you handle paying down your estate?
Each year, the Internal Revenue Service provides information about how much a person can gift to another person without having to pay a gift tax. In 2025, you can gift a person $19,000 per year.
The gifting limit is per giver, per recipient. This means that if you’re married, you can give someone $19,000 and your spouse can give that same person $19,000 without triggering the gift tax.
Another figure to know is that each giver, formally called a donor, can only gift up to $13.99 million in their lifetime if they die in 2025. The lifetime cumulative gifting limit is always equal to the threshold for estate taxes, so it changes annually.
Ensuring that your loved ones receive as much from your estate as possible can be challenging. Working with someone familiar with these matters may be beneficial to ensure you’re within the boundaries of the law.