Annual Gift Tax Exemption Increased to $13,000
The Utah Business, Real Estate and Estate Planning Blog, in a post by Matt Fanhauser, has alerted us to an increase in the federal annual gift tax exclusion, effective January 1, 2009, to $13,000 or, when a spouse joins in the gift, $26,000.
Federal tax law provides that the exclusion amount increases with inflation but only by $1,000 increments. Thus, it does not increase every year but only when the formula for the increase results in a $1,000 increase.
The annual gift tax exclusion is important for small business owners because lifetime, tax-free gifts provide a way to reduce the federal tax bite on estates that potentially would be taxable at a rate of 45%.
We have always included within our mandate to discuss litigation issues the discussion of appropriate steps one may take to reduce the likelihood of often bitter litigation by one’s beneficiaries. That means a developing a good estate plan which, in part, may include a plan for making tax-free or discounted gifts during one’s lifetime.
