Blog Author: Stephen C. Hartnett, J.D., LL.M. (Tax), Director of Education, American Academy of Estate Planning Attorneys, Inc. The federal estate and gift tax exclusion is set “permanently” to $5 million, adjusted for inflation. However, if you die between now and the end of 2025, the exclusion is doubled to $10 million, adjusted for inflation. Its inflation adjusted to $11.4 million in 2019. But, the federal estate and gift tax is the same regardless of where you live when you die. You could … [Read more...] about When and Where You Die Matters
Blog Author: Stephen C. Hartnett, J.D., LL.M. (Tax), Director of Education, American Academy of Estate Planning Attorneys, Inc. This is a two-part series concerning planning for lottery winners. The first part concerns avoiding pitfalls. The second part concerns planning strategies to consider. In July, a very lucky individual in San Jose, California, purchased the winning Mega Millions Jackpot ticket, matching all six numbers. The winner was able to choose between payments totaling $543 … [Read more...] about Planning for Lottery Winners, Part 1 of 2
Blog Author: Stephen C. Hartnett, J.D., LL.M. (Tax), Director of Education, American Academy of Estate Planning Attorneys, Inc. Estate planning attorneys and others in the wealth management community have known since mid-December that the amount clients can pass without taxation is now, temporarily, doubled. The new tax law doubled the exclusion until the end of 2025. On January 1, 2026, the exclusion reverts to $5 million (adjusted for inflation from 2011). Each year we get inflation … [Read more...] about Treasury Releases New Inflation Adjustment
The federal estate tax currently carries a maximum rate of 40 percent, and the amount of the exclusion is $5.34 million. These parameters were supposedly made permanent when the American Taxpayer Relief Act of 2012 was enacted. Of course, nothing is truly permanent when it comes to tax laws. Each year a budget must be passed, and there are always going to be proposed changes to existing laws. With this in mind, a new budget has been proposed for 2015 by the White House. Provisions contained … [Read more...] about Proposed 2015 Budget Would Change Estate Tax Parameters
When you hear about the existence of the federal gift tax, you may wonder if it is possible to give tax-free gifts to your children. The answer is yes and no. A Look at the Gift Tax The gift tax exists to close a loophole. The estate tax was first implemented in 1916. Originally, there was no gift tax to go along with it. As a result, people who were exposed to the estate tax gave away assets while they were living to avoid the death tax. As a response, the gift tax was implemented a few … [Read more...] about Can I Give Tax-Free Gifts to My Children?
There is a unified tax exclusion in California that separates those who must pay transfer taxes from those who are exempt. The lifetime unified exclusion at the present time is $5.34 million in 2014. There is a gift tax and an estate tax. The two taxes are unified. As a result of this unification, the exclusion applies to gifts that you give while you are living, coupled with the value of your estate as it is being transferred to your heirs after your passing. It should be noted that there is … [Read more...] about Should You Use Your Unified Tax Exclusion in California While You Are Still Alive?
The accumulation of wealth is largely considered to be a good thing, but unfortunately some bad things can go along with it like federal transfer taxes. When you bequeath assets to your loved ones, or give them gifts while you are still alive, the transfers could be heavily taxed. This is a serious matter, and you should take the appropriate steps to position your assets with tax efficiency in mind. Let's take a glance at a few frequently asked questions about federal asset transfer … [Read more...] about Frequently Asked Questions About Federal Transfer Taxes
If you are in possession of assets that exceed the federal estate tax exclusion amount, you may want to take steps to intelligently reduce the taxable value of your estate. One way to accomplish this objective would be to somehow utilize resources while you are still alive for the benefit of those that are on your inheritance list. This is easier said than done because there is a gift tax in place. It is unified with the federal estate tax, and in 2014 there is a $5.34 million unified lifetime … [Read more...] about Funding 529 Plan Using Annual Exclusion
If the value of your estate exceeds the estate tax exclusion amount, which in 2014 stands at $5.34 million, it may occur to you that giving gifts may be a way to gain estate tax efficiency. This exclusion applies to taxable gifts that you give throughout your life as well as the value of your estate, so using the lifetime unified exclusion really does nothing to preserve your estate tax cushion. However, there is another exemption that you can use to give gifts in a tax-free manner. Every … [Read more...] about Increased Annual Per-Person Gift Tax Exemption in 2013
Any time you give someone a gift, you are engaging in a taxable act. This is something that will go over the heads of most people because there is a $13,000 per year annual gift tax exemption. You can give gifts totaling this amount to any number of recipients each year without exposing yourself to the gift tax and its current 35% rate. Most people don't give gifts exceeding this amount to any one individual during a given year so it is usually not a factor. However, sometimes there are … [Read more...] about Can I Pay Someone’s Medical Bills as a Gift Tax-Free?