IRS Announces 2017 Inflation-Adjusted Gift and Estate Tax Figures

November 4, 2016 Alerts and Newsletters

The IRS announced inflation adjusted annual increases to the federal gift and estate tax exemptions for 2017.

The new lifetime gift and estate tax exemption is $5.49 million. An individual can therefore make gifts and leave money and property to beneficiaries totaling $5.49 million without paying any estate or gift tax. For a married couple, the new lifetime exemption is effectively $10.98 million. For gifts and bequests exceeding the exemption amount, the current federal estate and gift tax rate is 40 percent. Gifts to U.S. citizen spouses and charities, however, are free of tax and do not encroach on the lifetime exemption.

Depending on the domicile of any individual and on the value of his or her estate, state estate taxes may also be due.

The new exemption amount for the generation skipping transfer tax (GST tax), which applies in general when gifts and bequests are made to grandchildren and later generations, is also $5.49 million for an individual and $10.98 million for a married couple.

The annual gift tax exclusion remains the same: $14,000 per person per year. This feature allows a person to make tax-free gifts annually of up to $14,000 each to as many people as he or she wants without paying any gift taxes or using any of his of her lifetime exemption. A married couple can give up to $28,000 per recipient per year.

The annual gift tax exclusion has been the same since 2014 but was expected to increase in 2017. The annual gift tax exclusion is also increased based on inflation, but only in $1,000 increments.

The annual exclusion for gifts made in 2017 to a spouse who is not a United States Citizen will be $149,000 (increased from $148,000 in 2016).

These annual adjustments apply to transfers made on or after January 1, 2017. The following table shows a comparison of the 2016 and 2017 exemptions and exclusions.

Please contact a member of Verrill Dana's Private Clients Group if you would like to discuss estate planning strategies to make use of your annual exclusions and lifetime gift, estate and GST tax exemptions, or if you would like to discuss your estate plan generally.

Firm Highlights

Matter

Company Ownership and Succession

We provided advice to the sole owner of a significant privately held company in helping the owner to resolve the tensions inherent in his goals to maintain family control over ownership and management of...

Event

What Biden's Tax Plan Entails - How to Plan in the Midst of Uncertainty

Verrill is happy to sponsoring ACC Westchester's "What Biden's Tax Plan Entails - How to Plan in the Midst of Uncertainty" webinar on June 22. Attorneys Anya Endsley, Cheryl Johnson, and Regina Flaherty will...

Matter

Estate and Tax Planning

Representation of a client in connection with estate and tax planning involving net worth in excess of $500,000,000.00, including major philanthropic plans, disposition of an exceptionally valuable art collection and provisions for a non-citizen...

Matter

Family Business Termination

We represented key family members operating an extensive family business consisting of numerous operating companies and commercial real estate properties in delicate and volatile negotiations with a senior executive and family member leading to...

Matter

Sales of Interest

We have assisted a client and his other advisors in creating and implementing a plan, involving gifts and sales of interests to trusts for the benefit of younger generation family members, involving hundreds of...

Matter

Prenuptial Agreement

We represented the daughter of billionaire parents in negotiating a prenuptial agreement, including crafting disclosure of both interests in trusts of which she is currently a beneficiary and her contingent interests in assets that...

Matter

Trust Holding Dispute

We represented one of the independent trustees of a trust holding multibillion dollar investments in two public companies in the context of a family dispute respecting control of the family's interest in those companies...

Matter

Litigation and Negotiations of Trust

We represented the client and other family members in litigation and negotiations resulting in a settlement pursuant to which the Trustee of a Trust established by the client's late parent, with assets approaching $500,000,000.00...

Matter

U.S. and Foreign Tax Liabilities

We furnished advice to a client who is a U.S. permanent resident (green card) but a citizen of another country, in coordinating his estate planning and that of his parent (a citizen of that...

Matter

Estate and Tax Planning

We provided estate and tax planning, in conjunction with advice from other advisors, to the majority owner of a major family controlled network of businesses to ensure transfer of ownership and control to younger...

Contact Verrill at (855) 307 0700