Were you aware that the annual gift tax exemption will increase to $14,000 for 2013. This means that a person may give up to $14,000 per person to as many individuals as they wish in 2013 without using any of their lifetime gift tax exemption and without the need to file a gift tax return. For a married couple, this means they can give up to $28,000 to as many individuals as they wish without using any of their lifetime gift tax exemption and without the need to file a gift tax return.
It is important to pay attention to gifts that exceed the annual gift tax exemption. Those gifts count against the lifetime gift exemption which in 2013 is $1,000,000, unless a law is passed prior to the end of the year. Additionally, the amount of lifetime gift exemption you use reduces your estate tax exemption. If a single woman uses $400,000 of her lifetime gift exemption, she has reduced her estate tax exemption by $400,000. This means that if she died in 2013 she would only have a $600,000 estate tax exemption ($1,000,000 estate tax exemption reduced by the used lifetime gift exemption). If her estate exceeds $600,000, it will be subject to the estate tax.
Contributed by MH Estate Planning Attorney and Partner Katherine A. O’Connell
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This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.