A more thorough explanation:

Definition: The exemption equivalent is the maximum value of assets that an individual can transfer to another person without incurring a federal gift and estate tax.

Example: In 2021, the exemption equivalent is $11.7 million. This means that an individual can transfer up to $11.7 million worth of assets to another person without having to pay any federal gift or estate tax.

Explanation: The exemption equivalent is an important concept in estate planning. It allows individuals to transfer a certain amount of wealth to their heirs without incurring a tax liability. For example, if an individual has an estate worth $10 million, they can transfer up to $11.7 million to their heirs without having to pay any federal gift or estate tax. However, any amount transferred above the exemption equivalent will be subject to taxation.