Blog

2016 Gift and Estate Tax Exemptions

The IRS recently released the tax adjustments for 2016. As our firm focuses on gift and estate tax planning I wanted to share the relevant numbers with you.

The annual gift exemption remains at $14,000. As a reminder that is the amount each person can give away, each year, to any individual, and all without tax.  This can be given to relatives or friends. So, for example, if grandma and grandpa are worried that they will have an estate subject to estate tax at death they can write $14,000 checks to every child, every grandchild, etc…. In fact, grandma and grandpa can EACH write those checks so it’s really $28,000 in total.  That is the total of all gifts for the year so it’s not a bad idea to write your checks for just under $14,000 to allow for birthday and holiday gifts!

The federal gift and estate exemption (that is what you can give away at death or during life in excess of the $14k gifts mentioned above) is up to $5,450,000. This is up from $5,430,000 in 2015. It’s important to note that this tax does not effect very many people but some people accidentally slip into it.  This is a tax on all assets you own at death. This includes IRAs, 401ks, and other retirement plans in addition to your home, banks, stocks, etc…. Also, it includes the death benefit in life insurance that you own at death.

There are more numbers on the IRS website for Rev Proc 2015-53 at this link.  On that page you can see the income tax adjustments as well.

Here’s to a happy holidays in 2015 and an even better 2016 to you and yours!  -John

Ratings and Reviews

10.0John Bernard Palley
Wealth Counsel Member
2015 Best of the Best Badge