For 2015, you can leave gifts to other individuals upon your death worth up to $5.43 million free of any federal estate taxes.
This is the so-called estate-tax exemption If you are married, both you and your spouse are entitled to separate $5.43 million exemptions. If one spouse dies and does not use up his or her full exemption, the leftover exemption amount can be left to the surviving spouse.
A post in the Wall Street Journal notes that you can also give away a cumulative total of $5.43 million to relatives, friends, or whoever during your life without owing any federal gift tax.
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, the story notes.
However, gifts in excess of the $14,000 “freebie” will reduce both exemptions dollar for dollar.
However, most people will never reach the point of owing any federal estate taxes.
For those with very large estates, the $5.43 million exemption isn’t enough. That’s where the $14,000 gifts can help. They reduce your taxable estate.
If you have questions about estate planning, feel free to call us for a consultation at (626) 696-3145.
