Lifetime Exclusion From Gift Or Estate Taxes

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Lifetime Exclusion From Gift Or Estate Taxes

When you die, your assets and belongings–called your “estate”–are subject to taxation, but there is an amount under which the executor of your estate will not have to pay taxes.

In 2013, the exclusion is $5.25 million, and in 2014 the amount is going up to$5.34 million.

An exception to the tax is the “marital deduction.” By virtue of being married, anything you leave to your spouse comes under this marital deduction and is not part of your taxable estate. Thus, the tax is much higher for the last spouse to die, as no property is eligible for the powerful marital deduction.

There are other ways to reduce your taxable estate, such as giving to charity, titling and filling out beneficiaries on retirement accounts, and certain kinds of trusts. For more details on these and other estate planning opportunities, peruse our Estate Planning articles.

For comparison, here is a chart of historical Estate Tax Exclusion amounts, in reverse chronological order:

Year Estate Exclusion Amount
2014 $5,340,000
2013 $5,250,000
2012 $5,120,000
2011 $5,000,000
2010 $5,000,000
2009 $3,500,000
2008 $2,000,000
2007 $2,000,000
2006 $2,000,000
2005 $1,500,000
2004 $1,500,000
2003 $1,000,000
2002 $1,000,000
2001 $675,000
2000 $675,000
1999 $650,000
1998 $625,000
1997 $600,000

Photo used under Flickr Creative Commons License.

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Austin Fey is a Wealth Manager at Marotta Wealth Management, specializing in charitable giving and asset allocations. She is a regular contributor to our Marotta On Money articles, often giving advice to those just getting started in finance.

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818…)