Legal Question in Wills and Trusts in California
I understand there is a 5 million dollar exemption that can be used during one's lifetime or at time of death to transfer assets in an estate and/or to give a gift tax-free (which applies in years 2011-13)
I also understand that there is a 13,000 limit per person to transfer funds annually tax-free.
I am confused as to the difference between these to 'facts,' or how they interface.
thank you!
2 Answers from Attorneys
the 13,000 annual exclusion for federal gift taxes is per donor per donee and is in addition to the 5 million lifetime federal estate/gift tax exclusion. also if the annual exclusion is not exceeded, no federal gift tax return is required (whenever any amount of the lifetime exclusion is used a federal gift or estate tax return is required).
there are many other factors to consider before making lifetime gifts and a qualified estate planning attorney knowledgeable regarding taxation should be consulted before proceeding.
Indeed, as Mr. Field says, any gifts under $13K per donee per year do not chip away at the exemption amount, temporarily set at $5M. If you were to give $15K to someone, $20K would come off the total amount you can leave during life and a gift tax return would be required. See an estate planning or tax professional if there are any questions.
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