Under current law the federal estate tax, gift tax, and generation-skipping transfer tax exemptions have become unified and are indexed for inflation on an annual basis.  Since 2011, the exemption and tax rate have changed as follows:

Year    Exemption       Tax Rate

2011    $5,000,000      35%
2012    $5,120,000      35%
2013    $5,250,000      40%
2014    $5,340,000      40%
2015    $5,430,000      40%

The annual exclusion from gift taxes is also indexed for inflation on an annual basis but only in $1,000 increments.  Since 2011, the annual gift tax exclusion has changed as follows:

Year    Exclusion
2011    $13,000
2012    $13,000
2013    $14,000
2014    $14,000
2015    $14,000

While the IRS will not officially release the 2016 inflation-indexed exemption and exclusion until later in October, Wolters Kluwer Tax & Accounting has released its 2016 predictions based on historical inflationary trends.  According to Wolters, the exemption should end up at $5,450,000 in 2016, or $10,900,000 for married couples.  While this is a mere $20,000 per individual / $40,000 per married couple increase over the 2015 exemption, it is a whopping $450,000 per individual / $900,000 per married couple increase since 2011. Unfortunately, Wolters anticipates that the annual gift exclusion will remain at $14,000 for 2016.

Wealthy individuals and couples should continue to monitor these inflation-indexed numbers and plan accordingly. We will update you on the official 2016 numbers once they are released by the IRS.

Guidance and further information is available. You are not alone. Feel free to give us a call at 305-456-7158 and we will happy to schedule a Legacy & Estate Planning session to answer any questions you may have.

Saludos,

Yahima Suarez

PIC YS

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