Higher Gift Tax Limits for 2014
With the beginning of another year comes changes in the laws effecting federal estate and gift taxes. There are three primary taxes in this area: (1) federal estate, (2) the generation skipping transfer (GST), and (3) the gift tax.
For the year 2014, the exclusion from the federal estate tax is $5,340,000. This is an increase of $90,000 over last year’s exclusion amount of $$5,250,000. The exemption from the GST tax similarly increased from $5,250,000 to $5,340,000. The gift tax annual exclusion remains at $14,000. However, the lifetime gift tax exclusion increased to $5,340,000 as the lifetime gift exclusion is unified of linked with the federal estate tax. Specifically, the exclusion can be used either during lifetime or upon death. Any amount of the exclusion used during lifetime offsets that which can be used upon death.
For New Jersey residents, the state estate tax exemption remains unchanged at $675,000.
As always, proper planning is imperative. In addition for individuals and couples to desire shielding the exposure of estates to death taxes, prudent planning can preserve assets from long term care costs and unnecessary administrative fees. Moreover, it can insure that distributions to heirs can be undertaken in a manner to minimize income tax ramifications among other goals.
On behalf of the Trusts and Estates group at Capehart & Scatchard, we wish you a very prosperous 2014.
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