In 2011, the combined gift and estate tax exemption was set at $5,000,000 and was indexed for inflation. The Internal Revenue Service has announced that for gifts and deaths occurring in 2015, the indexed exemption amount will be $5,430,000 – an increase of 8.6% since originally established. This exemption amount applies equally to the Generation Skipping Transfer tax.
An individual donor may give away each year to as many donors as he or she wants, $14,000, which amount remains unchanged for 2015. This amount will remain the same until the indexed amount, as rounded, actually reaches or exceeds $15,000.
It is important to remember that for any gifts you wish to make to a donee for 2014, your check must clear the bank by December 31, 2014 regardless of the date on the check. You should allow at least two weeks from the date on which you mail your check until it clears your donee’s bank. In the case of a married couple with three children to whom they wish to donate the maximum annual exempt amount, the tax consequences of a missed donation could equal as much as $33,600.
An interesting, but stark, fact about practicing elder law and estate planning is that it is forward-looking. None of us wants to contemplate a finite future, yet when we’re alone in the dark at night, we all have to admit, albeit reluctantly, that our life won’t continue indefinitely. As I note on the Agins Law Firm website, http://www.aginslawfirm.com, the average lifespan of the white male in the United States has doubled since 1850 from 38 to 76 years, That is largely as a result of improvements in our standard of living and advances in medical technology.
As an elder law attorney, I spend much of my time talking to clients about planning for their future (and thinking about my own). My hope always is that these discussions don’t happen when they HAVE to, but rather, when they SHOULD, which is well in advance of any emergency.
Humans generally live in the moment without giving much thought to future imponderables. In the overall scheme of life, though, we know very little about what is going to happen when we walk out the front door in the morning. We always assume that our history will repeat itself, but that often is not the case. For that reason, it makes sense to deal with elder law questions as we do with insurance: no one wants to pay for insurance because it only pays off when things don’t go smoothly, but we do so anyway because it makes good sense (or is required). Similarly, a Health Care Power of Attorney or a Will are put in place to make sure that things DO go smoothly when life’s road takes a sharp curve or comes to an end.
The photo above is of a pond that I dug by hand and landscaped when I was in my 50’s. I’d sit on the bench at the end of the pond with my dog and would get lost in the moment. It was, in effect, my “Golden Pond.” Sitting there allowed me to watch the fish glide by while thinking about my good fortune and my plans for the future. I hope that you will allow me to gather you around my figurative pond to contemplate what is necessary to secure your future and your good fortune.