With tax season in full swing, we hope this chart and information helps you navigate through your estate tax planning in 2014.
Estate Tax:
The amount a person can pass on free from federal estate tax is $5,340,000. They are able to pass this money on during their life or at their death. If that amount is exceeded, either that person or their heirs will owe a tax of up to 40%.
Gift Tax:
The amount of money that can be given to any person each year that’s excluded from the gift tax is $14,000, per person per year.
Gifts excluded from taxes:
- Gifts to a charity.
- Gifts to a political organization.
- Gifts to a spouse.
- Gifts of educational expenses. (You must make direct payment to institution)
- Gifts of medical expenses. (You must make direct payment to medical facility)
Generation-Skipping Transfer Tax:
The generation-skipping transfer (GST) tax is a tax on property that is passed from a grandparent to a grandchild (or great-grandchild) in a Will or trust. If property is passed on to an unrelated individual, that person must be more than 37.5 years younger.
For additional help understanding these exemptions and rates, contact a qualified estate planning attorney.
