Tax Questions
How can I leave my estate to my spouse tax free?
An outright gift to your spouse is not taxable. A gift made at death qualifies for the unlimited marital deduction for estate taxes and, therefore, there will be no tax paid on the amount left to the surviving spouse. However, the Applicable Exclusion Amount, which can be used to reduce overall estate taxes to the couple, should be taken on the estate of the first deceased spouse as well as the second to die. The Applicable Exclusion Amount is per person, and is not doubled when the second spouse dies, so this tax-minimizing opportunity (currently $3.5mm in 2009) will have been lost unless it is used at the time of the first to die.
What is the annual gift tax exclusion?
The annual gift tax exclusion is an amount that can be given away annually without resulting in gift tax on the transfer. In the year 2009, the annual gift tax exclusion amount is $13,000 per individual recipient. There is no limit on the number of recipients to which qualifying gifts can be made, and they need not be family members. However, if you are elderly or disabled, be very careful about making gifts of any amount, because all gifts made in the five years prior to applying for Medicaid will be counted against you and will result in a period of ineligibility for Medicaid.
