Well, we have been waiting for it and it is finally here! The IRS has announced the annual inflation adjustments for 2015. The unified federal gift and estate tax exemption, including the amount an individual leaves to his or her beneficiaries at death and the amount of reportable gifts during life, will be $5.43 million in 2015. This amount has increased from $5.34 million, the federal estate tax exemption in 2014. This means that a decedent in 2015 will be able to pass $5.43 million tax free, cumulative of gifts which exceed the annual federal gift tax exclusion and amounts left to beneficiaries at death. Any amount transferred over $5.43 million is subject to a tax rate of 40%.
The annual federal gift tax exclusion remains at $14,000. Individuals can gift amounts up to $14,000 to as many individuals as he or she would like in 2015. Amounts gifted up to $14,000 per calendar year do not count towards the unified estate and gift tax exclusion, therefore providing a viable method of reducing the value of an individual’s taxable estate.
If you would like to discuss how the new tax laws affect your estate, please schedule an appointment.