CunninghamLegal – The Living Trust Lawyers
The year 2017 is bringing changes to the estate and gift tax exemption, the annual exclusion as well as a possible repeal of the estate tax due to President Trump and a Republican majority in Congress.
The estate and gift tax exemption is increasing this year as expected. As a refresher, the estate and gift tax is a tax on the transfer of assets either during life (gift tax) or at death (estate tax). The new exemption amount allows an individual to give away during life or at death $5.49 million without being subject to the tax. A married couple can double their exemption amount with portability, but portability requires the surviving spouse to make the election on a timely filed estate tax return (9 months after their spouse’s death).
The annual gift tax exclusion is still $14,000. The annual gift tax exclusion is the amount of money you can give away without being subject to gift tax. For example, if an individual gives $16,000 away, then they will have to report $2,000 of the gift ($16,000 minus the gift tax exclusion) on a gift tax return, thus, using a sliver of their $5.49 million of exemption.
President-elect Trump and the Republicans in Congress have their sights on a repeal of the estate tax, so 2017 may bring some historic changes. Interestingly, there has been little to no mention of repealing the gift tax. With the outgoing estate tax, there may be incoming changes for step-up in basis rules. However, like the current estate tax, the step-up in basis rules will have little impact on the vast majority of Americans. Trump’s tax plan will cap a step-up in basis on capital gains up to $10 million held at death (currently unlimited) and disallow contributions of appreciated assets into private charities.
Written by: Stephen M. Wood | Attorney at Law | CunninghamLegal | Camarillo Office | www.cunninghamlegal.com | (805) 484-2769