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Estate And Gift Taxes

Estate and gift taxes are taxes imposed on the transfer of property to someone either during your lifetime or at death. Both the Federal government and the State of Arizona have estate or gift taxes. The state taxes are currently subtracted directly from the federal tax, usually resulting in no extra tax, and therefore are of no consequence in this discussion, but this may change in the near future. The Federal Estate tax has recently been revised. There is a tax imposed if the gross estate is greater than $1,500,000 currently. That amount will increase over the next several years. The tax will eventually be eliminated but then revert to today's values after a one year absence. Because each individual is allowed to do whatever they wish with this amount prior to any tax being levied, it is important for couples with more than $1,500,000 to consult an attorney to structure their estates to take advantage of the law and protect this deduction for each spouse.

Also, during your lifetime, you can gift away $11,000 per year, per person, to as many people as you choose, without any negative tax consequences to the person making the gift, or the person receiving the gift. This gifting has no effect on the exemption of the first $1,000,000 of an individual's estate. If your total estate is less than $1,000,000  then you can gift larger amounts yearly with no tax consequences. For gifts over $11,000 it is necessary to file a gift tax return, but there will be no gift tax due.

This is an area far too complicated to present in a few paragraphs. If, after you add up all of you assets, possible inheritances, insurance, retirement plans, and other sources of wealth, you come up with a total of $1,000,000 or more, consult with an estate planning attorney and/or your accountant to determine if you need to take further steps to lessen or avoid federal taxes when you and your spouse die.

For more information please contact the Law Office of Paul C. Moors.

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