The applicable credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax.

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The applicable credit, also known as the lifetime exemption, is a specific amount of money that an individual can transfer during their lifetime without triggering gift tax or estate tax. As of 2021, the applicable credit is $11.7 million per individual. This is meant to provide a minimum amount of transfers that can be made without incurring transfer tax, making it easier for individuals to transfer assets to future generations or other recipients.

The Applicable Credit Is Designed to Allow a Minimum Amount