The Elder and Disability Law Firm, APC
Unification of Gift and Estate Taxes Should Be Understood
When you read about the gift tax and the estate tax as you're doing research into long-term planning you may hear about a $5 million exclusion. This is often mentioned as either a gift tax exclusion or an estate tax exclusion, so it can be kind of confusing.
You have to understand that the gift and estate taxes are said to be "unified" by the Internal Revenue Service. As a result, the $5 million exclusion that is in place at the present time applies to both gifts and the overall value of your estate. You don't have the ability to give $5 million in tax-exempt gifts during your lifetime and then have a $5 million estate tax cushion after your passing. The entirety of your exemption for both types of giving equals $5 million.
At the same time, if you are married both you and your spouse have this $5 million to work with. So as a couple you have a total of $10 million as the laws stand currently, and the estate tax exclusion is now portable. This means that the surviving spouse may utilize the personal exemption that went unused by his or her deceased spouse.
It should be noted that all the above is current as of this writing but changes are scheduled to take place.
If you would like to discuss these pending changes and have any questions that you have answered regarding the gift and/or estate tax, don't hesitate to pick up the phone to arrange for a consultation with an Inland Empire estate planning lawyer.