What Tax Changes Occurred in 2014 for Estate Planning?

Inflation adjustments affect federal estate tax deductions and in that regard can affect estate planning. Keeping up with the changes in federal laws that govern estates can be challenging, which is why working with your lawyer is important.

It seems like the legislature proposes changes every few years. The following are areas you should be aware of that changed or stayed the same in 2014:

• Federal estate tax exemption: The exemption rose from $5.25 million to $5.34 million. The exemption is the maximum estate value that is not subject to federal estate taxes. For married couples, the exemption doubles to $10.68 million.
• Gift tax exclusions: No changes occurred in gift tax exclusions, which remained at $14,000. You can provide anyone you want with a tax-free gift by keeping the amount gifted less than $14,000. Married couples have double the exemption, at $28,000. When you exceed the limitation, you must file a gift tax return.

CNN Money recently reported on President Obama’s release of his 2014 budget proposal. The proposal includes raising estate taxes. It reinstates the 2009 estate tax exemption levels, which were:

• Estate tax exemptions of $3.5 million (as opposed to the current $5.34 million)
• Estate tax rates of 45 percent instead of the current 40 percent rate

Of course, Congress must pass the proposal before it can go into effect. Fluctuating laws tend to make estate planning a dynamic rather than static activity. It is important to consult with your attorney and stay on top of changing laws. By working with an experienced law firm, you can ensure your Florida estate planning continues to meet your needs.