Estate and Gift Tax

• • What is the federal estate tax?

• • The federal estate tax is a tax imposed on the transfer of assets at death when the total value of the estate exceeds a specified exemption amount. It applies only to estates above that threshold, not to every estate.

    This exemption is indexed for inflation and adjusts annually. In recent years, it has been in the general range of $15 million per individual, meaning estates below that level do not owe federal estate tax.

• • Does Louisiana have a state estate tax?

• • No. Louisiana does not impose a separate state estate tax. This means estate tax exposure for Louisiana residents is generally limited to federal law.

    That said, the absence of a state estate tax does not eliminate the need for estate planning. Other tax, administrative, and succession considerations still apply.

• • How does the federal estate tax exemption work?

• • The exemption represents the amount you can transfer during life or at death without triggering federal estate tax. If the value of your taxable estate falls below the exemption amount, no federal estate tax is due.

    The exemption is applied per person and is adjusted for inflation. Married couples can use planning strategies that take advantage of each spouse’s exemption.

• • Why do people say most estates are not subject to estate tax?

• • Because the exemption is so high, the vast majority of estates fall below it. For most people, estate tax planning is not the primary concern.

    Estate planning still matters, but the focus is often on asset distribution, succession planning, incapacity protection, and administrative efficiency rather than estate tax exposure.

• • What is the federal gift tax?

• • The federal gift tax applies to certain transfers made during life. It works alongside the estate tax as part of a unified system.

    Large lifetime gifts reduce the exemption available at death. Smaller gifts may fall under annual exclusions and do not affect lifetime exemption amounts.

• • What is the annual gift tax exclusion?

• • The annual gift tax exclusion allows you to give a certain amount to each recipient every year without using any of your lifetime exemption. This amount is adjusted periodically for inflation.

    In recent years, the exclusion has been in the range of $19,000 per recipient per year, depending on the applicable adjustment.

• • Do gifts under the annual exclusion need to be reported?

• • Generally, gifts that fall entirely within the annual exclusion do not require a gift tax return. Gifts that exceed the exclusion typically must be reported, even if no tax is owed.

    Reporting does not necessarily mean paying tax. It often means tracking use of the lifetime exemption.

• • How are estate and gift taxes connected?

• • Estate and gift taxes share a single lifetime exemption. Gifts made during life that exceed annual exclusions reduce the amount available to shelter transfers at death.

    This unified system prevents people from avoiding estate tax simply by giving away assets shortly before death.

• • Does inflation adjustment matter for planning?

• • Yes. Because exemption amounts are indexed for inflation, figures change over time. Estate plans should be reviewed periodically to confirm assumptions remain accurate.

    Relying on outdated numbers can lead to unnecessary concern or missed planning opportunities.

• • Are inherited assets always taxable?

• • No. Inheriting assets does not automatically trigger estate tax or income tax. Estate tax applies at the estate level, not to individual beneficiaries, and only if thresholds are exceeded.

    Income tax treatment depends on the type of asset inherited, not simply the fact of inheritance. In most instances, there will be no income tax liability.

• • Do gifts trigger income tax for the recipient?

• • No. Gifts are not treated as income for the recipient under federal law. The gift tax system applies to the person making the gift, not the person receiving it.

    This distinction often causes confusion, especially when large gifts are involved.

• • Is estate tax planning only for high-net-worth individuals?

• • Estate tax planning primarily affects individuals with estates approaching or exceeding federal exemption levels. For others, estate planning serves different goals.

    Even when estate tax is not a concern, planning helps control how assets pass, who manages them, and how succession is handled under Louisiana law.

• • How does an estate planning attorney help with estate and gift tax issues?

• • An estate planning attorney explains current exemption levels, inflation adjustments, and how the rules apply to your assets.

    Based on your goals, the attorney recommends appropriate strategies and drafts documents that carry out your decisions within the framework of federal and Louisiana law.

Take Action Today!

Even if taxation is not a concern, we can help you create a tailor-made plan that is ideal for you and your family. To get started, send us a message or call our Metairie, LA estate planning office at 504-831-2348.