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2014 Estate And Gift Tax Update

2014 Estate And Gift Tax Update


2014 Estate And Gift Tax Update

The fiscal cliff drama heading into the start of 2013 fortunately was not repeated as the calendar turned to 2014.  Having said that, as we now start 2014, it is important to highlight the following major estate and gift tax laws and changes made in 2014:

  1. The estate, gift and generation skipping transfer (“GST”) tax applicable exclusion amount has increased from $5.25 million in 2013 to $5.34 million in 2014.  This means a husband and wife with proper planning could transfer $10.68 million estate, gift and GST tax free to their grandchildren.
  2. The estate, gift and GST tax rate remains the same at 40%. 
  3. New York and New Jersey state exclusion amounts remain unchanged.  The New York estate tax exclusion amount is $1 million and the New Jersey exclusion amount is $675,000.  As the disparity between the federal exclusion amount and the state exclusion amount increases, the need to carefully plan to not trigger unnecessary state estate taxes, grows as well. 
  4. The gift tax annual exclusion remains at $14,000.
  5. Portability of the federal exclusion amount is permanent, meaning, the unused exclusion of the first deceased spouse may be used by the surviving spouse at his or her death.  For many reasons, including the fact that GST exclusions and state exclusions are not portable, it is critical to properly plan your estate to ensure maximum tax savings are achieved.
  6. The gift tax annual exclusion to a non-citizen spouse has been increased from $143,000 to $145,000.  While gifts between spouses are unlimited if the donee spouse is a United States citizen, there are restrictions when the donee spouse is not a United States citizen.

Jermaine

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