How to Use Estate and Gift Tax to Maximize Tax Savings
Estate Unified Credit Amount Increases to $5,490,000 in 2017.
Before the close of the current tax year talk to an estate planning attorney. The Estate Tax is a tax on the transfer of property to your heirs upon your death. Each of us gets an estate and gift tax exemption allowing us to transfer property to our heirs potentially tax free. For the year 2017, the estate and gift tax exemption amount is increased to $5.49 million per person (up from $5.45 million in 2016). That means that you and your spouse have the ability to pass on and protect $10.98 million from federal inheritance taxes. Anything above that amount may be subject to a federal estate tax of 40%.
The annual gift exclusion amount remains at $14,000. Annual gift exclusion gifts don’t count towards your lifetime gift exemption, which means you can give away $14,000 to as many people as you like without worrying about gift taxes. A husband and wife can each make the $14,000 gift to the same individual, essentially doubling the benefit without any tax consequences. For a family with four children, that can add up to over $100,000.00 in annual tax-free gifts.
We recommend taking a look at how you and your heirs may be able to benefit from a tax-free gifting program. Be sure to consult with an estate planning attorney before making any decisions that may affect your taxes and/or estate plan.