2015/2016 Estate and Gift Tax Update
Experts have started to calculate the inflation adjustments to key estate and gift exemption amounts for 2016. Note that these are not the official figures to be released by the IRS, but should be used as a guide. The IRS will officially release the numbers later this year.
For an estate of any decedent dying during calendar year 2016, the applicable exclusion is increased from $5.43 million to $5.45 million. This change increases not only the applicable exclusion amount available at death, but also a taxpayer’s lifetime gift applicable exclusion amount and generation skipping transfer exclusion amount. This means a husband and wife with proper planning could transfer $10.90 million estate, gift and GST tax free to their children and grandchildren in 2016.
The estate, gift and GST tax rate remains the same at 40% and the gift tax annual exclusion remains at $14,000.
While the New Jersey state exclusion amount remains unchanged at $675,000, the New York exclusion amount was changed as of April 1, 2014. Beginning April 1, 2014, the exclusion is as follows:
• $2.0625 million for decedents dying between April 1, 2014 through March 31, 2015;
• $3.125 million for decedents dying between April 1, 2015 through March 31, 2016;
• $4.1875 million for decedents dying between April 1, 2016 through March 31, 2017;
• $5.25 million for decedents dying between April 1, 2017 through December 31, 2018. Beginning in 2019, the exclusion would be indexed for inflation, and equal to the Federal exclusion.
The gift tax annual exclusion to a non-citizen spouse has been increased from $147,000 to $148,000. While gifts between spouses are unlimited if the donee spouse is a United States citizen, there are restrictions when the donee spouse is not a United States citizen.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.