Estate and Gift Tax

The American Taxpayer Relief Act signed into law on January 2, 2013, established permanent exclusions from estate and gift tax that are indexed for inflation and further established portability of the estate and gift tax exemption between married couples. The basic exclusion amount for decedents dying in 2014 is $5,340,000.00. The applicable exclusion amount consists of the sum of the basic exclusion amount and, in the case of a surviving spouse, the deceased spousal unused exclusion (DSUE) amount. In order to claim the benefit of portability, the executor (or a non-appointed executor) of the deceased spouse’s estate must elect portability of the DSUE amount on Form 706, United States Estate Tax Return. Only the estates of U.S. citizens or residents are eligible to make the portability election.

Our lawyers can help you determine whether to make gifts during your lifetime and in what amount and with what documentation. We can help you decide if the estate and gift tax exclusion is likely to be sufficient to protect you from exposure to estate tax, particularly if you are married and the portability election is available to carry over the unused basic estate tax exclusion amount of the first spouse to die. We can help you explore whether marital or credit shelter or other traditional trusts should be used for other reasons such as probate avoidance, protection of beneficiaries from creditors, protection of the surviving spouse from possible future Medicaid ineligibility, and planning for blended families, even if there is little risk of estate tax exposure.