THE ATTORNEY'S CORNER: 2015 FEDERAL ESTATE AND GIFT TAX LIMITS

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“Articles Concerning Trusts, Wills, Probate, Family Law & more”

By: Stephen C. Ross, Esq.

February 13, 2015 (San Diego County) – The federal estate tax exemption for 2015 is increased to $5,430,000.00 per person from $5,340,000.00 per person in 2014. A husband and wife each have an exemption. Therefore, a couple can pass on up to $10,860,000.00 without paying estate tax. This assumes they have not made prior lifetime gifts. This is important to people with a large estate as they can pass on $90,000.00 more tax free this year than in 2014. The top federal estate tax rate is 40% and is applied to amounts exceeding the exemption amount.

The federal gift tax is tied to the estate tax to prevent double dipping. In other words, you can make tax-free lifetime gifts as-long-as you keep track of the gift amounts given. The amount of life-time gifts will ultimately reduce the amount of your federal estate tax exemption by an amount equal to the gift amount.

The 2015 annual gift tax exclusion amount is $14,000.00, the same as it was in 2014. This is an amount separate from the lifetime gift exclusion amount. Therefore, you can give up to $14,000.00 to any number of people and it will not count toward the lifetime gift exclusion. For example, a couple could each gift $14,000.00 to each of their three children for a total of $84,000.00.

For those funding a 529 college savings plan, the IRS allows you to make a 5-year election to put five years of the annual exclusion amount into the plan at one time. You will have to file a gift tax return, but you don't have to pay gift tax as-long-as you haven't given the child other gifts during that time period.

Stephen represents estate planning, trust, will, probate, trust administration, business formation, stepparent adoption and family law matters. He conducts estate planning and probate seminars throughout San Diego County. For more information or to schedule a seminar contact Stephen at (619) 795-8524, stephen@stephenrosslaw.com or visit www.stephenrosslaw.com.

Disclaimer: Information contained in this article is believed to be accurate. However, you should seek professional legal advice before relying on the information. Stephen is not licensed to practice law in any state other than California and “The Attorney’s Corner” is not intended as an advertisement.

Visiting Stephen’s website does not create an attorney-client relationship and confidential information is not protected until a written agreement is signed.


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