We may be facing a “use it or lose it” scenario when it comes to year-end planning for estate and gift taxes. Yet, because of the uncertainty in the laws, many taxpayers have not taken any action. It is important to understand that this inaction may prove very costly potentially amounting to additional taxes of several million dollars for many families.
For the remainder of the year, the exemption for the lifetime federal gift tax, generation-skipping transfer (GST) tax and the estate tax is $5.12 million per person ($10.24 million per married couple) and the tax rate is at a historic low of 35 percent. That means that a person may give away (during life or at death) $5.12 million without paying any federal gift or estate tax, and a married couple may give away, gift- and estate-tax free, a total of $10.24 million (in each case, reduced by prior taxable gifts).
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