November 13, 2013
Recently, the IRS released the 2014 annually adjusted amount for the unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption: $5.34 million (up from $5.25 million in 2013). But even with the rising exemptions, making annual exclusion gifts is still worth considering. The 2013 gift tax annual exclusion allows you to give up to $14,000 per recipient tax-free — without using up any of your gift and estate or GST tax exemption. (The exclusion remains the same for 2014.) The gifted assets are removed from your taxable estate, which can be especially advantageous if you expect them to appreciate. That is because the future appreciation can avoid gift and estate taxes. But, you need to use your 2013 exclusion by December 31. The exclusion does not carry over from year to year. For example, if you and your spouse do not make annual exclusion gifts to your granddaughter this year, you can’t add $28,000 ($14,000 each) to your 2014 exclusions to make a $56,000 ($28,000 each) tax-free gift to her next year. Please contact us for ideas on how to make the most of annual exclusion gifts.