Many laws go into effect on January 1 every year. Although many new laws went into effect at the beginning of this year, not many of the new laws affect your estate planning.
The two things that did change this January 1 are the annual gift tax exclusion and the federal estate tax exclusion amounts. Neither of these are actual changes to the laws, just updates to the amounts of the exclusions.
The annual gift tax exclusion is now $16,000 (increased from $15,000). This amount applies to each giver and each recipient which means that you can now give $16,000 this year to each recipient without paying a tax on that gift or having the amount of the gift included in your federal estate tax exclusion calculation on your death. Spouses can each give $16,000 per recipient per year.
The federal estate tax exemption amount is now $12,060,000. This is the amount that each taxpayer can transfer on their death without having to pay estate tax. If your estate (or if you and your spouse’s estates together) are close to this amount, please consult with an attorney to prepare your estate documents. If your estate (or if you and your spouse’s estates together) are below this amount, the trusts at California Trusts Online may be suitable for you.
We at California Trusts Online wish you a very happy and productive New Year!