Contrary to what many think, the Federal gift tax has not been repealed. However, the gift tax rate has been lowered to 35%, down from the 45% rate in 2009. Under the current gift tax law, each person may give away (during his or her lifetime) as much as $1, million in cash or other property without paying any gift taxes. Any gifts which exceed this amount will be taxed at 35%. However, the gift tax will not apply to most of the gifts people make because each person can give $13,000 per year to any person without reducing the $1 million exemption. This $13,000 per year exclusion from the gift tax is known as the "Annual Exclusion." The Annual Exclusion, combined with other estate planning techniques, can help to reduce your estate for estate tax purposes and transfer wealth to your children and grandchildren.
If you need estate planning help, contact Peterson Law Group.