Annual Gift Tax Amount Set to Increase in 2013

There is considerable uncertainty surrounding the estate-planning options that may be available in 2013.  What is certain, however, is that the annual exclusion gift amount, which has been fixed at $13,000 since 2011, will increase to $14,000 in 2013.
The annual exclusion amount is the gift amount that can be made without incurring federal gift tax liability.  An individual can make as many gifts to as many individuals as he or she chooses without incurring the tax, as long as each gift is below the annual exclusion amount. Gifts may be made directly to an individual, or to a trust if preferred. 

When a gift exceeds the annual exclusion amount in any single instance, the excess triggers a requirement to file a gift tax return.  The individual’s remaining lifetime gift and estate tax exemption amount (presently fixed at $5 million and scheduled to decrease to $1 million in 2013) will be applied to the excess amount of the gift (i.e., the amount over the annual exclusion for the applicable year).

If you are interested in making a gift this year and have a question about the impact of the annual exclusion amount or your obligation to file a gift tax return, please contact us for further guidance.

~Submitted by M Zwerling