While taxes may famously be the most dependable thing we have to look forward to the than the eventual heat death of the universe, those who know how to use the tax system also look forward to the IRS’s yeary announcement of it’s adjusted estate and gift tax exemptions. And so, just as the sun rises in the East and sets in the West, the IRS was released it’s annual figures for what can be exempted by giving to the ones you love.
For 2016, the estate and gift tax exemption has been raised to $5.45 million per individual. In plain terms, under these newly announced figures, one individual may now leave as much $5.45 million to his or her heirs free from taxation. Despite this new adjustment (up from $5.43 million in 2015), the individual gift exemption has stayed steady at $14,000 per person per year. The exemption between spouses has risen now to $10.9 million that may be protected from federal estate and gift taxes. While it is not an enormous change over the previous year, even little bit helps.
It is worth noting that the threshold for estate taxation has risen impressively since the turn of the century, up from only $675,000 in 2001. Also, it is possible that with the advent of the Trump administration, the estate tax may be done away with entirely, as is the regular party line for Republicans. As recently as April, there was an attempt to repeal which enjoyed the support of several Democrats as well.
As with all things political, nothing is certain until it is authored, passed and signed into law, so we will have to wait and see what 2017 brings. Perhaps a year from now we’ll all be saying how the IRS has released it’s adjusted figures for estate tax — nothing! If you are looking to make the most of your assets through careful and prudent planning, the guidance of an experienced attorney can help you create the perfect plan for your specific needs.
Source: Forbes, “IRS Announces 2016 Estate And Gift Tax Limits: The $10.9 Million Tax Break,” Ashlea Ebeling, accessed Dec. 01, 2016