Noted Fairfax, Virginia Estate Planning Attorney Discusses 2017 Estate and Gift Tax Exclusion Limits
Fairfax, VA (Law Firm Newswire) April 7, 2017 – Beginning in 2017, there has been an increase in exemptions that will enable taxpayers to make more significant lifetime gifts and to acquire more assets through various estate planning vehicles, including a sale or grantor trust.
In addition, taxpayers can leave more income-producing assets to children or grandchildren whose tax brackets may be lower, or who may live in states that have a low income tax rate or no state income tax.
The following are some of the tax exemption inflation increases for 2017:
· A $5,490,000 federal estate tax exemption and a 40 percent federal estate tax rate. The new exemption amount represents a rise from $5,450,000 in 2016.
· A $5,490,000 GST tax exemption and a 40 percent federal estate tax rate. The new exemption amount represents a rise from $5,450,000 in 2016.
· The lifetime gift tax exemption is $5,490,000, and the federal gift tax rate is 40 percent. The lifetime gift tax exemption rate rose from $5,450,000 in 2016.
· The annual gift tax exclusion is $14,000, the same as in 2016.
Noted Fairfax, Virginia estate planning attorney, Lisa McDevitt, says, “Individuals and their families should consult an estate planning attorney to ensure that they take full advantage of the estate and gift tax limits for 2017.”
The majority of estate planning documents are established with the potential for some flexibility and usually, exemption amounts have no effect on them. However, there may be situations where an update to the documents would prove beneficial. For instance, if a married couple resided in a state that has a state estate tax, there could be provisions that should be appended to the documents that could result in a savings of estate tax upon the demise of the first spouse.
In 2017, the amount of the gift tax annual exclusion is $14,000 per person, and $28,000 per married couple who agree to divide their gifts. Taxpayers can make their annual exclusion gifts directly to their beneficiaries or to trusts they create for their benefit. However, gifts made to trusts will not be eligible for the gift tax annual exclusion unless the beneficiaries possess certain limited rights to the donated assets. These rights are usually referred to as “Crummy” withdrawal powers.
Lisa Lane McDevitt
2155 Bonaventure Drive
Vienna, VA 22181