The Lifetime Exemption to Gift and Estate Taxes

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The Lifetime Exemption to gift and estate taxes
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A Lifetime of Hard Word
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Through a lifetime or working, saving, and
investing you likely have a respectable estate
you wish to pass down
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Incorporating tax avoidance strategies into your
estate plan lets you do this without losing a
sizeable portion of your estate to gift and
estate taxes
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What to Avoid
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FEDERAL GIFT AND ESTATE TAXES may be levied on
the total value of your estate assets when you
die
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Some states also have a similar tax
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The Lifetime Exemption
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Each TAXPAYER is entitled to exempt assets gifted
during his/her lifetime and lifetime exeat death
up to the mption limit
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Prior to ATRA the limit fluctuated wildly
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ATRA set the limit at 5 million, adjusted
annually for inflation
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For 2013 the limit is 5.25 million
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John and Anna A Lifetime Exemption Example
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The Marital Deduction
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The unlimited marital deduction allows a taxpayer
to leave an unlimited amount of assets to his or
her spouse at the time of death free from gift
and estate taxes
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Portability
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Portability allows a surviving spouse to make use
of any unused portion of the deceased spouses
lifetime exemption limit
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ATRA made portability permanent
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What If Annas Estate Grows?
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The purpose of investing is to grow your assets
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If Annas estate grows by just 1 million between
Johns death and her own death her estate will
lose 300,000 of that to gift and estate taxes
because her estate will now exceed her combined
lifetime exclusion limit by 750,000 (9 million
- 8.25 million 750,000)
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That will result in a 300,000 tax liability
(750,000 x 0.40 300,000)
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The Annual Exclusion
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Annas Gift and Estate Tax Liability
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By using the lifetime exemption, the marital
deduction, portability, and the annual exclusion
Annas estate could avoid paying any gift and
estate tax at all when she dies
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Learn More About Gift and Estate Taxes in
Portland Oregon