Attorney Michael Gilfix Shares Insights on Estate Taxes for the New Year
San Francisco, CA (Law Firm Newswire) January 20, 2017 – Estate planning involves countless complex rules that can change every year. It is important to ensure that estate planning documents take modifications into account and are up to date. Tax laws govern how people can make gifts during their lifetimes and transfer estate property to…
PUBLISHED BY: LFN Primary
San Francisco, CA (Law Firm Newswire) January 20, 2017 – Estate planning involves countless complex rules that can change every year. It is important to ensure that estate planning documents take modifications into account and are up to date.
Tax laws govern how people can make gifts during their lifetimes and transfer estate property to heirs tax-free up to a certain amount. In 2017, the lifetime gift and estate tax exclusion amount has increased by $40,000 from 2016 to adjust for inflation. This means each individual can protect up to $5.49 million from estate and gift tax.
“Neglecting to actively engage in tax and estate planning can be a costly mistake for your heirs,” said nationally known estate planning attorney Michael Gilfix. “By consulting a knowledgeable attorney who stays abreast of the changing rules, one can make sure their estate plan will achieve the intended goal of creating financial security for loved ones.” Gilfix is the author of “Beat Estate Tax Forever: Planning for Future Generations,” a book that identifies ways to reduce or eliminate estate tax exposure.
In 2017, the annual exclusion amount for gifts remains unchanged at $14,000. This means individuals are allowed to give up to $14,000 a year to any member of persons with no tax implications for the giver or recipient.
There are exceptions. For example, gifts to a spouse are not subject to annual limits. In addition, payments for tuition or medical care are not taxable regardless of the amount. The caveat is that the funds must be transferred directly to the institutions involved.
Many parents and grandparents consider giving larger, life-changing sums of money to children, especially during the holiday season or special occasions. For example, they may want to pay college tuition or contribute to a home down payment. In such cases, the giver needs to examine tax laws to ensure the gift will not trigger an avoidable estate tax bill.
Generally, people of ordinary means do not face tax issues with gifts. However, larger gifts are subject to a dramatic 40 percent estate tax that reduces the portion of the giver’s estate that is exempt from tax.
“Many people have a false sense of security that they do not need estate planning at all, or that it is just for wealthy individuals,” said Gilfix. “Careful estate planning ensures assets go to designated beneficiaries with minimal estate and gift tax liability.”