Federal Estate And Gift Taxation

The federal estate and gift tax are different taxes from the federal income tax. Federal estate tax is a tax based on the value of property that a decedent owns at the time of death and it is imposed when a person dies. Originally, the estate and gift tax were created as a means of discouraging individuals from passing property onto to family members tax-free.

As of 2017, the estate tax generally applies only to individual whose estate exceeds 5.49 million dollars. That is because in 2017 the estate and gift tax "exemption" is 5.49 million dollars per individual.

The gift tax is separate from the estate tax; but if you do not need your 5.49 million dollar exemption to avoid estate taxes (because your estate is less than that amount), then you can use that 5.49 million exemption to avoid gift taxes on gifts you make during your lifetime. If your estate is greater than 5.49 million, then you will want to limit gifts to $14,000.00 per person/per year in 2017. The $14,000.00 amount is the amount you can gift tax-free beyond the lifetime exemption of 5.49 million dollars. It is referred to as the gift tax annual exclusion amount. The annual exclusion amount increases each year but as of 2017 was $14,000.00.

People with taxable estates, meaning estates in excess of 5.49 million dollars, are well-advised to consult an estate tax planner who can assist them in sheltering assets in a manner that avoids or eliminates estate and gift taxes. This is especially true for married couples, who enjoy even greater options for tax savings and avoidance.

If you wish to learn more about the tax planning opportunities available for an estate in excess of 5.49 million dollars, please call us for a free consultation (888-526-4489).