By Attorney Ted Brown
Effective January 1, 2014, the unified federal gift and estate tax exemption was increased to $5.34 million dollars. This change reflects an adjustment for inflation from last year's 5.25 million exemption amount. In January 2013 as part of the “fiscal cliff “ negotiations, Congress established the limit at $5.25 million to be adjusted annually for inflation.
What this change means is that an individual can now give up to $5.34 million during their lifetime, or pass away with an estate valued up to $5.34 million dollars, without paying any Federal gift or estate tax.
The annual gift reporting limit remains at $14,000 per person. Total annual gifts less than this amount do not need to be reported and are not subject to gift tax. Total annual gifts in excess of this amount count against the donor's $5.34 million lifetime gift exemption.