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2022: Changes and New Laws in Tax and Estate Planning



Happy New Year! As expected, there are changes in the Estate Planning and Tax area in 2022. Although this list is certainly not exhaustive, I have summarized a few changes that clients often ask me about. If you have any concerns or questions, feel free to email me at the link below. Here are some important ones to know about for 2022:


2022 Changes to the Gift Tax Law

My clients often want to make gifts to their kids, and are concerned that either they, or their child, will have to pay tax. They are always surprised to learn that very few people ever incur a gift tax. The giver of the gift can give $16,000.00 per person per year (up from $15,000.00 in 2021) without paying tax or filing a gift tax return with the IRS. The recipient of the gift does not pay tax.


If the gift is OVER $16,000.00, you don’t pay any actual tax until your lifetime gifts exceed $12.06 million (the new 2022 estate tax exemption). If you do gift over $16,000.00, you are required to file a gift tax return (with no tax due) to keep track of how much of that $12.06 million you have used up. Remember, you and your spouse can EACH gift $16,000 to the same person in one calendar year – so your kid can receive a tax-free gift of $32,000.00 this year. Want to adopt me?


2022 Changes for Estate Tax (Federal Estate Tax)

Many clients ask about “estate tax”, also referred to as “inheritance” or “death tax”. In other words, how much money can the kids inherit without having to worry about writing a big tax check to the government.

First, California does not have an “estate tax” (about the only thing California does not tax – right?). The federal government imposes an estate tax on large estates. The amount of money you can leave to your beneficiaries after you pass, without paying estate tax, is called the “estate tax exemption”. To give some perspective, the estate tax exemption was only $675,000.00 in 2001 – so if you left your kids $700,000.00 back in 2001, the estate would be taxed on that extra $25,000.00. And that estate tax is a hefty one.


The estate tax exemption has now increased to 12.06 million per person in 2022. That means that a married couple can pass up to $24.12 million without paying any estate tax at all.

So, only 1% of estates filed an estate tax return in 2020, with only about .04% paying any tax. Most people just don’t have to worry about estate tax anymore. However, this current exemption is expected to drop back down to about 6.2 million (indexed for inflation) in 2025.


2022 Changes in Social Security Benefits

The government continues to increase the retirement age for full Social Security benefits. For those born in 1960 or later, full retirement age is now 67. For those, waiting until you turn 70 will increase your monthly payment by 2/3 of 1% per month after your full retirement age. For example, if you turn 70 in 2022 and start receiving Social Security benefits on your birthday, you will see a whopping 32% increase in your monthly payments. Remember – that is for the remainder of your life. So, depending on the year of your birth, if you are in good health, and can wait before taking your benefits until age 70, it may make financial make sense to do so. Social security has a great website where you can get information about your benefits, and determine what is right for you at ssa.gov.

2022 Changes for Medicare

If you’re over age 65 and on Medicare, you will likely see a $10 increase in your Part B premium payment. The 2022 premium payment is now $170.10, up from $148.50 per month. If you are a high income earner (defined in 2022 as income over $91,000.00 for an individual, or twice that amount for a couple), the increase is larger, and could be as much as $578.30 per month depending on your income. Since Medicare premiums increase for those with higher incomes, be careful if cashing in an annuity, or taking large distributions from your IRA – these could be counted as income and you may unintentionally trigger a higher Medicare premium.

We will see other Medicare deductible and co-payment changes in 2022. For more information on these changes, visit the Centers for Medicare & Medicaid Services website.

Happy New Year!

Yes, there are a lot of changes to keep track of. If you have had changes in your life (marriage, divorce, death of a spouse or parent, changes in your “trusted” people you previously named in your trust or other legal documents), I encourage you to review your estate plan.


On behalf of myself and our longtime team members Miriam and Gina, we wish you and yours a very happy and HEALTHY 2022!

Jane McNamara

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