Estate Tax Planning
There are a variety of strategies that can result in significant estate tax savings for your family is used properly.
Effective January 1, 2014, the Federal Estate Tax exemption amount is $5.34 million dollars. This means that any “estate” valued less than $5.34 million dollars is not subject to the tax, while an estate greater than that amount is subject to the tax. The current tax rate is 40% of the excess.
However, even if your estate is less than $5.34 million dollars, there are several important planning considerations to take into account.
Current law states that gifts exceeding $14,000 per beneficiary, per year must be reported to the IRS on an annual basis (Form 709). This is known as the annual exclusion amount and is only a reporting requirement. Annual gifts less than $14,000 are excluded from this reporting requirement.
Gift tax is not owed until the total value of gifts made in excess of the annual exclusion amount exceed the lifetime exemption amount, which is currently $5.34 million dollars. By law, the lifetime gift exemption amount and the estate tax exemption amount are the same.
So it is important to remember that reportable gifts also count against your estate tax exclusion amount.
Ohio Estate Tax may STILL BE DUE for those who died prior to January 1, 2013 if the value of their estate at death plus any gifts made within three years of death was greater than $338,333.