On November 15, the IRS announced the official estate and gift exclusion amounts for 2019 in Revenue Procedure 2018-57.

For an estate of any decedent dying during calendar year 2019, the applicable exclusion is increased from $11.18 million to $11.4 million.  This change increases not only the applicable exclusion amount available at death, but also a taxpayer’s lifetime gift applicable exclusion amount and generation skipping transfer exclusion amount.  This means a husband and wife with proper planning could transfer $22.8 million estate, gift and GST tax free to their children and grandchildren in 2019.   If no new tax law is passed, the increased exclusion amounts are scheduled to expire on December 31, 2025, which would mean a reduction in the exclusion amounts to $5 million plus adjustments for inflation.

The estate, gift and GST tax rate remains the same at 40% and the gift tax annual exclusion remains at $15,000.

The gift tax annual exclusion to a non-citizen spouse has been increased from $152,000 to $155,000.  While gifts between spouses are unlimited if the donee spouse is a United States citizen, there are restrictions when the donee spouse is not a United States citizen.

The New York exclusion amount was changed as of April 1, 2014, and does not match the federal exclusion amount.  In 2018, the New York exclusion amount is $5.25 million.  Beginning in 2019, the exclusion is scheduled to increase to $5.49 million, and then will increase with inflation each year thereafter.  It is important to note that, unlike the Federal exclusion amount, the New York exclusion amount is not portable, meaning if the first spouse to die fails to utilize his or her full exclusion amount, the surviving spouse will not be able to utilize the first spouse to die’s unused exclusion amount.

The fiscal cliff drama heading into the start of 2013 fortunately was not repeated as the calendar turned to 2014.  Having said that, as we now start 2014, it is important to highlight the following major estate and gift tax laws and changes made in 2014:

  1. The estate, gift and generation skipping transfer (“GST”) tax applicable exclusion amount has increased from $5.25 million in 2013 to $5.34 million in 2014.  This means a husband and wife with proper planning could transfer $10.68 million estate, gift and GST tax free to their grandchildren.
  2. The estate, gift and GST tax rate remains the same at 40%.
  3. New York and New Jersey state exclusion amounts remain unchanged.  The New York estate tax exclusion amount is $1 million and the New Jersey exclusion amount is $675,000.  As the disparity between the federal exclusion amount and the state exclusion amount increases, the need to carefully plan to not trigger unnecessary state estate taxes, grows as well.
  4. The gift tax annual exclusion remains at $14,000.
  5. Portability of the federal exclusion amount is permanent, meaning, the unused exclusion of the first deceased spouse may be used by the surviving spouse at his or her death.  For many reasons, including the fact that GST exclusions and state exclusions are not portable, it is critical to properly plan your estate to ensure maximum tax savings are achieved.
  6. The gift tax annual exclusion to a non-citizen spouse has been increased from $143,000 to $145,000.  While gifts between spouses are unlimited if the donee spouse is a United States citizen, there are restrictions when the donee spouse is not a United States citizen.