A Congress Bearing Unusual Gifts
For those inclined to be generous, Congress made it a lot
easier last year. As part of the tax cut extension, Congress increased the
estate tax exemption as well as increasing the gift tax exclusion. It is now
possible for an individual to give $5 million without a gift tax. Each spouse
could separately gift $5 million or for a couple, acting together, $10 million.
The individual annual gift limit remains at $13,000. The extension is good for
two years. No one knows what will happen afterwards. The $5 million figure
could stay, it could revert to the previous $1 million or it could be any other
number. Although anyone who watches Congress closely soon learns that it is
difficult to predict Congressional actions, most observers believe that
Congress won’t make retroactive changes to the tax law during this two year
period. For wealthy individuals who are in a position to take advantage of the
higher gift tax exclusion, the next two years may prove to be a uniquely
favorable period. Many possibilities
have been opened up by these tax law changes and the window of opportunity
could shut as quickly as it opened.