Next year, that $13,000 limit on gifts is
expected to increase to $14,000—an inflation adjustment required by law. The
number isn't yet official—and won't be until later this year when the Internal
Revenue Service will announce this and many other inflation adjustments.
When it comes to estate
planning, it ultimately comes down to what the laws themselves provide. But
fear not, not all questions of estate planning law come down to politics. For
example, with no political posturing involved at all, the annual exclusion
amount is set to rise for the first time since 2009.
The Wall Street Journal broke the good news as early as it could, in a
Q&A entitled “Expect Gift Limit to Rise Next Year.” First, a caveat: it’s not the present
lifetime exclusion of $5.12 million you can expect to see increase, as the jury
is still very much out on that one. Rather, it’s the annual gift tax exemption
presently set at $13,000.
Currently, you can exclude
$13,000 per person per year, before ever reducing your lifetime exemption
amount. Good news: that amount is set to adjust up to $14,000.
We await official numbers, but
they should arrive later in the year. If and when the annual gift exclusion
increases, this will bring a welcome bump in your wealth transfer
If nothing else, the attention
given to this uptick in the annual gift exclusion also may offer a wake-up call
to the power of annual giving. Just think of what you can do for each of your
loved ones with an annual gift of $14,000.
Likely your loved ones could use the extra assistance
in these tight financial times, and you get the benefit of seeing their
stewardship (or lack thereof). In fact, depending on whether they are wise or
foolish with the gift, you can make adjustments to your estate plan
Contact Meier Law Firm to discuss all of your estate planning options.
Reference: The Wall Street
Journal (September 29, 2012) “Expect Gift Limit to Rise Next Year”