Estate and Gift Tax Limits

The lifetime gift and estate tax exemption is $5.49 million in 2017 and $5.6 million in 2018.  If you leave an estate behind that is less than that amount, the estate won't owe any federal estate tax. 

All property left to a surviving spouse passes free of estate tax.  All property left to a tax-exempt charity is also free of estate tax.

The estate tax rate for estates valued over the limit is 40%

A husband and wife each get their own exemption. So a couple will be able to give away $10.98 million tax-free in 2017 and $11.2 million in 2018 (assuming they haven’t made prior lifetime gifts).

?You can gift to individuals up to $14,000 in 2017 and $15,000 in 2018 without triggering the gift tax.  This includes charitable gifts, gifts to spouses, gifts to political organizations, gifts of educational expenses, and gifts of medical expenses. 

You can give away up to that limit to as many individuals as you’d like. A husband and wife can each make separate $14,000 gifts in 2017 ($15,000 gifts in 2018). This is not the combined total they can gift; it is the individual gift total.  So a couple could make $14,000 gifts to each of their four grandchildren, for a total of $112,000. The annual exclusion gifts don’t count towards the lifetime gift exemption.

A unified credit applies to taxable estates and allows you to give away up to $5.49 million in 2017 ($5.6 million in 2018) without having to pay gift taxes.

In addition to federal estate taxes, some states have estate taxes and inheritance taxes. In states with inheritance tax laws, taxes must be paid by the person who receives inherited property (as opposed to estate taxes which are paid from the decedent's estate). Inheritance tax exemptions and rates may vary depending on who received the property, i.e. the decedent's spouse may be taxed at a lower rate than would be a friend of the decedent. A number of states are phasing out their inheritance tax systems. 

Be sure to contact your state's tax department or consult with an estate planning lawyer, CPA or other professional.