Making year-end gifts

As the end of another year fast approaches, it is important for individuals to refocus on their own estate and gift tax planning. There is no better time than year-end to examine where you are from a financial perspective and whether gifting for estate or income tax purposes is warranted. One important factor to consider in any gifting campaign involves where certain tax related exemptions will be set for the upcoming year. The IRS has identified the following inflation adjusted figures which will apply for the 2015 calendar year:

  1. Estate Tax Exclusion Amount and GST Tax Exemption. The applicable exclusion amount for estate tax and the generation-skipping transfer tax exemption will both be increased from $5,340,000 to $5,430,000, per person.
  2. Annual Exclusion Amount for Gifts. The annual gift tax exclusion figure will remain at $14,000 for 2015. That being said, the figure for annual exclusion gifts to a non-citizen spouse will increase from $145,000 to $147,000 in 2015.
  3. Special Use Valuation. If a decedent dying in 2015 elects to use the Section 2032A special use valuation method for certain qualified real property, for calculation purposes the decrease in the property value may not exceed $1,100,000 (up from $1,090,000).
  4. Estate Tax Installment Payments. The dollar amount which will be used to determine the 2% portion of the estate tax payable in installments under I.R.C. § 6166 will increase from $1,450,000 to $1,470,000.

By and large, the change in figures for 2015 is beneficial to the average taxpayer, especially with respect to the applicable exclusion amount for estate tax purposes and the GST exemption. Therefore, for individuals facing potential federal estate tax, it may be a good time to consider making additional gifts at year-end.

Please feel free to contact one of our lawyers to assist you in this endeavor.