Starting next year, people who have done some estate planning and made the maximum tax-free transfers to their families (and those thinking about doing it) can take another crack at it. Beginning January 1st 2014, the amount folks can pass on during life (and at their death) completely free from federal estate tax will increase by an additional $90,000.
If you were paying attention to the “Fiscal Cliff” news at the end of 2012, you may remember that there was a great deal of concern over whether the historically generous Estate and Gift Tax exclusion levels would automatically expire at the end of that year. Fortunately, Congress took action, and for the first time in a long time put a “permanent” Estate and Gift Tax plan in place.
Part of the scheme enacted last year includes an automatic annual increase in the unified Estate and Gift Tax exclusion amount to account for inflation. For 2013, the unified exclusion amount was $5.25 Million per person.
According to this article from CBS News, an individual in 2014 will be able to give away a total of $5.34 Million over the course of their life without owing any federal Gift Tax. The estate of an individual who dies during 2014 can likewise pass on up to $5.34 Million free of any federal estate tax (less any amount of lifetime gifts which would reduce the total available exclusion amount).
Unlike the lifetime exclusion, however the Annual Gift Tax Exclusion is projected to remain level at $14,000 per person, per year according to the article. For more information on additional exclusions, such as the Generation-Skipping Tax exemption and the Foreign Income Exclusion, among others, see the original article, Higher Limits for Estate Tax Credits in 2014.