Higher Limits for Estate Tax Credits in 2014

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Estate Tax | Anchorage, AK AttorneysStarting this past January, the amount that people can pass on to their families during life and at death—completely free from the federal estate tax—increased by $90,000. According to an article from CBS, tax experts from the Research Institute of America calculated and reported increases for 2014 to a number of tax limits, including the standard deduction amount, the income, the personal exemption amount, and more. They also calculated adjusted amounts for the various estate and gift tax limits that will apply this year.

That means people who have done some estate planning and already made the maximum tax-free transfers to their families can get even more tax-free money transferred.

The article describes some of the new limits that affect tax-free gifts and other estate limits that changed in 2014:

Estate and gift tax exclusion amount unified. For gifts given and estates of decedents who die in 2014, the exclusion amount will be $5.34 million, which is up from $5.25 million in 2013. This year, each person has a credit that can be used to offset the estate tax on an estate of up to $5.24 million of assets. Individuals can make gifts during life or transfers at death of up to this higher limit and pay no federal estate tax. Additionally, spouses can now combine their unused individual credit amounts and pass on assets free of tax on an estate of up to $10.68 million at the death of both partners.

Generation-skipping transfer (GTS) tax exemption increases this year. The new exemption from the GTS tax is now $5.34 million for transfers in 2014, up from $5.25 million in 2013.

There is an increase in annual exclusion for gifts to non-citizen spouses. The yearly exclusion for gifts made in 2014 to spouses who are not citizens of the United States is now $145,000 — that is up from $143,000 in 2013.

Changes to gift tax annual exclusion in 2014.  The gift tax annual exclusion this year will be $14,000, the same as in 2013. Parents may now also use the strategy of “gift splitting,” or combining gifts for their children. This means they can each make a gift of $14,000, for a total amount of $28,000, to a single child every year.

What does this all mean for you? These changes could save you and your family money by lessening the amount of taxes to be paid on the worth of your estate.  If you are considering doing some estate planning and want to make the most tax-free transfers possible for your family, contact an experienced estate planning attorney.

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About Jenn Messick

I am an attorney practicing at M/V Alaska Law, an Anchorage, AK law firm helping clients all throughout Alaska navigate legal issues in divorce, family law, probate, and bankruptcy. I'm an outdoors person who enjoys hiking, skiing, hunting, spending time with family, and the beautiful scenery in Alaska. Jenn Messick's Google+ Profile

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