By: Tip Richmond

The exemptions were increased in 2017 from  $5,450,000 to $5,490,000, and the annual exclusion remains the same at $14,000 per donee. These rules mean the following: 

            1.         Each individual can give up to $14,000 per donee (e.g., child/grandchild) per year without any gift tax consequences.  Gifts to US citizen spouses can be unlimited due to the unlimited gift tax marital deduction; 

            2.         Each individual can transfer up to $5,490,000 of assets to non-spouse beneficiaries during lifetime and/or at death without any gift or estate tax consequences.  An individual can transfer during lifetime and/or at death an unlimited amount of property to a US citizen spouse outright or in trust without gift or estate tax consequence due to the unlimited estate tax marital deduction.  The combination of these rules means: 

                        a.         An unmarried individual can transfer $5,490,000 to beneficiaries other than a spouse (e.g., children, grandchildren or trust for spouse and descendants) before any Federal gift or estate tax will be due (and then at the 40% rate); 

                        b.         A married couple can transfer up to $10,980,000 to beneficiaries before any estate tax will be due; 

                        c.         With more sophisticated planning, an unmarried individual can transfer $5,490,000 of assets to trusts for children (and grandchildren) that will be exempt from any estate or Generation Skipping Transfer Tax at the death of the child (including appreciation during the child’s lifetime).  That amount is $10,980,000 for a married couple.


 For more information, call Tip Richmond in our Lexington, Kentucky office at 859-899-8712.