Image by M. Gustafson Gervasi, 2013
Fall colors may be at peak brilliance as I type, but our friends at the Internal Revenue Service have already thought ahead to calendar year 2014. When January 1st arrives Americans should keep two things in mind.
First, the federal estate tax exemption will increase to $5,340,000, up from $5,250,000 in 2013. What this means is any one person who dies in 2014 with an estate worth less than $5,340,000 does not need to worry about an estate tax. Those who have a net worth in excess may face a federal estate tax being applied to any amount in excess. Note, exceptions are married for married couples as well as those naming nonprofits in their estate plan.
Second, the world of the gift tax will not change. Unlike the federal exemption, the amount will not increase in the new year and will remain at $14,000. An important number to keep in mind when gifting assets. If the amount you gift to any one person in that calendar year is less than $14,000, no tax is owed by the gift maker. Gifts that exceed the amount are likely subject to the tax, barring special circumstances.
As always, a blog is not legal advice and should not be relied on given the ever changing legal word. It is meant to spark discussion and promote education. Please consult with an attorney prior to taking any action.
Thank you for reading, and have a great weekend.