Typically, new amendments or laws regarding estate planning will start at the beginning of the year, and 2014 will be no different with regard to some changes in estate planning. One of the biggest changes hitting the landscape is that as of January 1st, individuals are able to pass on an additional $90,000 free of the federal estate tax to others during their life and at death. Since this is such a dramatic change, it's worth a call to your estate planning attorney to talk about how this might alter your existing plans for the upcoming year.
What's behind the change? It's a lot more practical to give individuals the opportunity to give gifts during their life or at death at this new higher limit without having to worry about the estate tax. Previously, the exclusion amount was capped at $5,250,000, but now each personal obtains a "Credit" to offset estate taxes on amounts up to $5.34 million.
Also new for the upcoming year is an increase for the generation-skipping transfer tax exemption (up to the same $5.34 million as mentioned above) and the increase to the annual exclusion for gifts to non-citizen spouses (from $143,000 to $145,000). A minor increase to the foreign earned income exclusion is also being put into place, from $97,600 to $99,200. The gift tax, however, will stay the same, allowing each person to gift up to $14,000 without any tax ramifications.
Reading through these changes should get you thinking about whether you're affected by any of the updates to the law. Estate planning can be a confusing process, but it's much easier when you have the guidance of a trained professional. It's a great time of year to set up an appointment to bring in your existing documents for review and to consider whether any updates are required. If you're ready to get organized for 2014, contact a Wheaton estate planning lawyer today.