The IRS has set new estate and gift tax limits for 2016. The estate and gift tax exemption will now be $5,450,000 per individual, up from $5,430,000 in 2015. This means that an individual can leave $5.45 million to their heirs and pay no federal estate or gift tax for 2016 (considering he or she did not previously make any gifts during his or her lifetime). A married couple will be able to exempt $10,900,000 from federal estate and gift taxes. But it's not automatic. Under the rules of portability, the surviving spouse must elect to use portability by filing an estate tax return for the estate of the first spouse to die, even when no tax is due.
Separate from this lifetime gift exemption amount is the annual gift tax exclusion amount. The annual gift exclusion remains the same at $14,000 and an individual can give $14,000 to as many individuals as he or she would like.
About the Author
Christine Chung, Esq.