• New Estate And Gift Tax Law
  • May 16, 2011
  • Law Firm: Fowler White Boggs P.A. - Tampa Office
  • Last December Congress passed comprehensive legislation (the “2010 Tax Act”) which includes important changes to the federal estate and gift tax laws. The 2010 Tax Act reinstates the estate tax which was repealed in 2010, but increases the estate tax exemption for every individual to $5 million. This $5 million exemption can be used on transfers at death or may be used to make lifetime gifts. This is a dramatic change from the gift and estate tax law in effect for the past 10 years. The $5 million exemption is reduced by any exemption you have already used. In addition, the GST tax is reinstated with an increased exemption of $5 million.

    The new $5 million estate and gift tax exemption is in addition to annual exclusion gifting which is $13,000 per person for 2011. For example, a husband and wife together can give a total gift of $26,000 to anyone. Annual exclusion gifts may be made to any number of beneficiaries. Annual exclusion gifts do not reduce either spouse’s $5 million exemption.

    The new exemption amounts in the 2010 Tax Act will expire at the end of 2012, but Congress may act to reduce the new exemption amounts as early as October 2011. You may want to ensure your ability to use the full $5 million exemption by making gifts before then.