19 Dec / Estate Tax
The estate tax exemption for 2014 is $5,340,000 while the 2013 exemption was $5,250,000. The gift tax exclusion for both 2013 and 2014 is $14,000. These exemptions are for the decedent and the one giving the gift. They are not in regards to the beneficiary or the one receiving the gift.
While the estate tax law is very complex there are a few basics. Estate tax is paid by only once the second spouse dies. The first deceased spouse does not result in a tax obligation. A estate tax return Form 706 is only necessary if the decedents total assets is in excess of the $5,340,000 exemption. Only the assets in excess of the exemption is subject to tax. Giving lifetime gifts annually up to the $14,000 annual gift tax limit will help to reduce you estate. When gifting it is best to gift appreciating assets. Giving a gift in excess of the annual exclusion does not necessarily create a tax, it does however cause a reportable event. That reportable event includes the filing of Form 709.
Tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.