Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, November 17, 2012

Annual Gift Tax Exemption Rises

IRS 2At the beginning of 2013, the annual gift tax exemption will increase from $13,000 to $14,000. This is good news for spouses because they can combine their individual gift tax exemptions to double the amount that they can give tax-free. If a person makes a gift that exceeds the annual gift tax exemption then the exceeded amount goes towards the lifetime gift tax exemption. If a person exceeds both limitations, a person could be taxed up to 35% on the amount that exceeds both exemptions.

The easiest way that a person can take advantage of the annual tax exemption "is to give cash or other assets each year to each of as many individuals as you want." Another option that a taxpayer might want to use is to place the the annual amount in a Section 529 education savings plan. Under this option, a taxpayer can establish several different accounts for several different people. There is a benefit to this action. Any money placed within the accounts can appreciate and be withdrawn tax-free on the assumption that it is withdrawn for an educational puropse. 

See Deborah L. Jacobs, IRS Raises Yearly Limit For Tax-Free Gifts, Forbes, Oct. 18, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


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