The IRS has announced the 2016 inflation adjustments to many tax items. Among these on the estate and gift tax side:
- The unified estate and gift tax exemption amount is $5,450,000 (up from $5,430,000 in 2015)
- The exemption from GST tax is $5,450,000 (up from $5,430,000 in 2015)
- The gift tax annual exclusion will remain at $14,000
- The annual exclusion for gifts made to noncitizen spouses is $148,000 (up from $147,000 in 2015)
As mentioned in previous blog posts, these amounts, and the inflationary increase in these amounts, provide a variety of planning opportunities including the following:
- Leveraging the increased amounts to make gifts of business interests that are subject to valuation discounts to family members or trusts for family members
- Using the increased amounts to make gifts/sales to intentionally defective grantor trusts
- Using the increased amounts to make outright gifts to children and grandchildren
The annual inflation adjustment to the estate, gift, and GST tax exemptions is also great opportunity to institute a yearly gifting program to continually pass wealth to family members without incurring tax.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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