Nov 7, 2014

IRS announces 2015 estate tax exemption

The estate tax certainly isn't what is used to be. And that's a good thing. Before 2001, a significant percentage of my estate planning clients were concerned with finding ways to minimize estate taxes. But with the current generous estate tax exemption, today's client typically is more concerned with minimizing capital gains taxes and income taxes. 

Of course, if you are among the minority of individuals with a potentially taxable estate, you still need to be concerned about estate taxes. You'll be glad to hear that in 2015, the lifetime unified estate and gift tax exemption will increase to $5.43 million per individual, up from $5.34 million. This is the amount that you may give away free of estate and gift taxes during your lifetime and at your death. If you are married, you and your spouse may double that amount. Moreover, a surviving spouse may use any portion of the deceased spouse's unused estate tax exemption (provided that the survivor elects the "portability" option on the final tax filing). The top tax rate for anything above the exemption is 40%. 

The annual gift tax exclusion will remain unchanged in 2015, at $14,000. This is the amount that you may transfer to another person other than your spouse, free of gift tax and without impacting your lifetime exemption. If you are married, you and your spouse may double that amount. For example, a married couple could give each of their three children $28,000 per year without any gift or estate tax ramifications. Certain gifts may exceed $14,000 per year and still incur no gift tax, such as a check written for a child's college tuition when the check goes directly to the educational institution. 

Learn more about estate and gift taxes here.

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