The maximum annual gifting amount to each individual remains $14,000 for both 2016 and 2017.  Spouses combining gifts can give a total of up to $28,000 to a single individual.  You can make gifts to multiple people in a single year.

Additionally, you can make unlimited payments directly to some educational and medical providers on behalf of someone else.  Of course there are regulations – for example, qualified education expenses are limited to tuition and you cannot pay for books or room and board as a qualified education expense.

The 2016 total exemption applying to estate tax and lifetime gifting is $5,450,000; for 2017 it will increase to $5,490,000.  If you make a gift to any individual that exceeds the annual gifting exclusion amount ($14,000), that will reduce your lifetime (including estate tax) gift amount.  At death, any unused exemption can be transferred to a surviving spouse but this requires a timely filing with the IRS.

If you have an estate that is potentially subject to estate tax, we can assist you with strategies designed to minimize your taxable estate and transfer wealth to the next generation.  This includes holding life insurance outside of your estate using an irrevocable life insurance trust, or using tax savvy trusts such as grantor retained annuity trusts (GRAT) to help keep the taxable value of your lifetime gifting low.  Contact us for more information about estate tax savings or gifting strategies that are right for you.

Karen Hindson, Hindson & Melton LLC