2017 Estate and Gift Tax Updates You Should Know About

Jessica Schultheis

by Jessica Schultheis

Jessica Schultheis is a former attorney with My Pink Lawyer®, now an Assistant State Attorney in Pensacola, Florida. Jessica graduated from the University of Florida for both her undergraduate studies and law school.

It can be hard to think about it, but it’s important to make sure you have an estate plan in place to make sure your assets go where you want them to go after your death. Gift and estate tax laws can change every year and those changes can affect your estate planning. Let’s take a look at some changes affecting estate planning this year:

Annual exclusion amount for gifts

The tax laws provide for an annual exclusion that allows gifts up to a certain amount without having to report anything on a gift tax return. For 2017, that number stays at $14,000 per person per year.

You can still make up to $14,000 in gifts to as many different people as you want throughout the year without having to file a gift tax return.

A federal gift tax return is required to be filed for any gifts exceeding $14,000 per person in a calendar year. 

For large estates, a good way to deplete your assets very quickly is to make annual gifts to all of your children, grandchildren, and other relatives and even friends. This way, the money is taken out of your taxable estate and directly given to your loved ones without anyone having to pay taxes on the gifts.

There are exceptions to the annual exclusion amount. For example, people can make unlimited gifts to their spouse, even it exceeds the $14,000, without having to file a gift tax return.

Additionally, money you spend on medical care or education for your children or someone else isn’t treated as a taxable gift as long as you pay the educational or medical institution directly.

Total exclusion amount for gift and estate tax

The U.S. tax laws provide for a single tax credit that allows people to make taxable gifts during their lifetime and to transfer estate property to their heirs without any estate taxes up to a certain amount.

For 2017, the new amount is $5.49 million.

This amount is high enough that most people won’t have to worry about the federal estate tax. But please keep in mind that this amount includes the value of every asset you own and also the death benefit value on your life insurance policy.

Married couples can still double up on their lifetime exclusion amount. Portability allows a surviving spouse to use any unused portion of the lifetime exclusion of their deceased spouse.

For 2017, portability will allow married couples to transfer almost $11 million of taxable property to heirs without having to pay any estate tax.

Just make sure the estate makes the appropriate election to take advantage of this provision.

Gift and estate tax rates

The 40% tax rate for gift tax and estate tax remains unchanged.

Florida Tax laws

Even though federal estate tax laws have changed dramatically in recent years, not all states have followed suit.

Luckily, in Florida, our state does not impose a separate estate tax or inheritance tax.

Your estate will only have to pay the federal estate taxes described above if its net value when you die is more than the current exemption amount, which is currently $5.49 million.

By being smart with your estate planning, you can make sure your loved ones are taken care of according to your wishes.

Interested in learning how you can save your family substantial money, time, and headaches when you pass away?




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