Here are three simple but important things you need to know about estate planning.
- The estate tax exemption
For 2015 you can leave gifts to others upon your death up to $5.43 million free of federal estate taxes. If married, both you and your spouse have this exemption, totaling $10.86 million.
A story in the Wall Street Journal also points out two other important figures to know:
- The gift tax exemption
You can also give away a cumulative total of $5.43 million to family or friends during your life without owing any federal gift tax. If married, both spouses get the $5.43 million exemption.
Gifts made under the $14,000 annual gift tax exclusion rule will not trigger any federal gift taxes nor will they reduce your federal gift tax or estate tax exemptions. Gifts in excess of the $14,000 “freebie” will reduce both exemptions dollar for dollar.
- The $14,000 annual exclusion
Gifts made up to this amount each year reduce your taxable estate.
If you have questions about estate planning, feel free to call us for a consultation at (626) 696-3145.
