With
the turn of the year come higher tax exclusions that may impact estates
and annual gift giving. It is a good time to begin planning your
gifting for the year and to review your estate plan and beneficiary
designations.
Estate Tax Exclusion Amount
For 2015, the federal estate tax exclusion amount is $5.43
million per person (up from $5.34 million in 2014 thanks to an inflation
adjustment). This is also the current “unified exclusion amount”
for the sum total of a person’s lifetime gifts that exceeded the
applicable annual exclusion, together with the property passing to
beneficiaries upon the donor’s death. This figure also represents
the current exclusion amount for "generating-skipping" gifts (e.g.,
gifting to grandchildren).
There is currently no state inheritance, estate or gift tax in North Carolina.
Annual Exclusion Gifts & Spousal Gifts
There is no change in the federal annual gift exclusion
amount this year; it remains at $14,000 per donee. This exclusion
allows an individual donor to give an unlimited number of “annual
exclusion gifts,” so long as the amount of the gift does not exceed
$14,000 per donee during calendar year 2015. (Generally, married
couples can give $28,000 per donee as long as certain measures are
taken.)
Annual exclusion gifts do not use up any of a person’s
“unified exclusion amount” (see above). If you make a gift in
excess of $14,000 to one donee, you may still avoid paying a gift tax on
the excess by filing a gift tax return (IRS Form 709) and electing to
use part of your unused unified lifetime estate and gift tax exclusion
amount to cover the overage. If you are married, you may avoid
paying gift tax on excess amounts by having your spouse join in the gift
up to a maximum of $28,000 per donee; a gift tax return may or may not
need to be filed depending on specific circumstances.
As in years past, a person may give an unlimited amount to
his or her spouse by using the “unlimited gift tax marital deduction,”
as long as the spouse is a U.S. Citizen. If the spouse is not a
U.S. Citizen, gift tax-free transfers to the spouse this year are
limited to a “super annual exclusion gift amount” of $147,000, up from
$145,000 in 2014.
Keep in mind that all annual exclusion gifts and spousal
gifts must be gifts of a “present” interest as opposed to a “future”
interest, and further qualifications can apply. You should consult
your tax advisor prior to making a particular gift. A more
detailed discussion of gift tax issues can be found in
Gift Tax Basics, an article that I posted to this site last year.
Personal Update Reminder
As you contemplate your gift plans for 2015, consider
reviewing your life insurance and retirement plan beneficiary
designations to confirm (1) that the designations are what you think
they are, (2) that they continue to conform to your current wishes; and
(3) that the designations are properly coordinated with your estate plan
as spelled out in your Will or Revocable Trust. And if you have
not reviewed your estate planning documents (will, trusts, powers of
attorney and health care documents) recently, you may also want to make
sure they are up to date.
Look for a discussion of beneficiary designations -- and
common mistakes associated with them -- in an upcoming edition of “A
Legal Moment.”
Other Recent Articles
