New Higher Estate Tax Exclusions for 2014

An important part of estate planning is gifting.  The benefits include transferring assets to beneficiaries tax-free.  It also allows the guarantors to see their gifts being enjoyed by their family members and friends.  In 2014, the amount that people can transfer or gift while still avoiding taxes will be increased.

With data from the Consumer Price Index collected from September 2013 and the previous eleven months, the limits were calculated to increase.  The tax specialists from the Research Institute of America enlarged previous limits for various estate taxes and gift taxes which will be in effect starting January 1, 2014.

One limit which will be enhanced is the unified estate and gift tax exclusion amount.  In 2013, the exclusion amount for lifetime gifts is $5,250,000 for gifts given and estates of individuals who passed during this year.  In 2014, that limit will reach $5,340,000.  Spouses will still be able to combine these credits to a total of $10.68 million dollars, assuming that neither spouse has gifted or transferred assets at the time of death.

Another exemption which is set to increase in 2014 is the generation skipping transfer tax.  This tax is for gifts and transfers in trust to a younger generation of people.  For unrelated beneficiaries, they must be 37-1/2 years younger than the guarantor.  If the beneficiary is a family member, they must be at least one generation younger to qualify.  This exemption will increase from $5,250,000 dollars up to $5,340,000 in 2014.

The gift tax annual exclusion will remain unchanged from the 2013 level.  The limit will be $14,000 again unless it is combined with a spouse.  These combinations can double the exclusion to $28,000.  This practice is termed “gift-splitting” and can apply to a single individual or child every year.

If you are considering ways to avoid estate tax, there are additional options to consider such as trusts.  It is important to enlist the support of a legal professional.  They can assist you in avoiding costly estate taxes and probate.  Contact an experienced estate planning attorney in  DuPage County today.