Florida residents may be interested in learning that several changes to federal estate and gift tax laws go into effect starting in 2014. Some of these changes will allow more money to be passed on to family members and others before federal taxes are imposed.
For those that pass away or give gifts to family members in 2014, the unified estate and gift tax exclusion is being raised by $90,000, from $5,250,000 in 2013 to $5,340,000. What this means is that individuals can make gifts during life or transfers at death of up to this new higher limit and pay no federal estate tax. In addition to the higher limit, spouses can combine their individual credits and accordingly leave up to a $10.68 million bequest tax-free upon the death of the second spouse (assuming no prior use of the credits).
Other changes include an increase in the exemption for generation-skipping transfers and a higher annual exclusion for gifts to non-citizen spouses. Left unchanged is the gift tax annual exclusion, which reamins at $14,000 a year. Parents, however, will continue to be allowed to combine gifts to a single child, allowing for a total exclusion from gift tax of $28,000 in 2014.
The tax aspects of an estate plan can be complex, with numerous exclusions and other factors to take into account. An attorney who is experienced and familiar with estate planning may be able to help advise a client as to these and other issues that can affect the amount of money distributed either during life or through a will or other testamentary instrument.
Source: CBS Money Watch, "Higher limits for estate tax credits in 2014", Ray Martin, September 23, 2013