To take advantage of the $14,000 per donee annual gift tax exclusion
The top federal estate tax rate is 40%, so employing the annual gift tax exclusion
can save a significant amount of tax.
However, regardless of who contributes, it is important to remember that the contribution is a gift that will generate gift tax liability if the annual contribution to any single individual's account exceeds the annual gift tax exclusion
amount (currently, $14,000).
In 2016, the annual gift tax exclusion
will remain at $14,000, but there is one change to the rules: The first $148,000 in gifts to a spouse who is not a U.
In terms of year-end planning, anyone with estate tax planning concerns (federal or state) should consider year-end gifts that use the annual gift tax exclusion
, which is $14,000 in 2015.
Contributions can be made to the plan by the grandparent, and are usually limited (although not by law) to the annual gift tax exclusion
, which is presently $14,000 annually per individual.
The owner can then transfer some of his or her FLP interests to family members using the annual gift tax exclusion
After an ILIT has been created, taxpayers run inn) situations where the Funds required to pay the insurance premiums significantly exceed their annual gift tax exclusion
Thankfully, his wife was still insurable at a standard rate, allowing them to dedicate the annual gift tax exclusion
into a life insurance product.
Commissioner, the Tax Court allowed a small business owner to make gifts of small business interests without specifying the exact amount of the gift given--instead, the owner was permitted to state in the gift transfer documents that the gifts were to equal the annual gift tax exclusion
Assuming also the ILIT contains a "Crummey" provision prohibiting the trustee from using policy premiums gifted to the trust for 30 to 61 days after the date of the gift, then the premiums additionally qualify for the federal annual gift tax exclusion
($13,000 per individual in 2012).
In addition, the Tax Relief Act of 2010 maintains the current annual gift tax exclusion
of $13,000 per donee, which can also still be used to avoid federal gift tax liability on premium payments.