❖The federal and estate gift tax exemptions are each set at $5 million for 2011 and 2012. 

This year, the federal gift tax exclusion is $13,000. Excess gifts have gift tax consequences. 

Suppose that Marge Jones, a widow, gives $300,000 to her daughter in 2011. The first $13,000 is covered by the annual exclusion.

 ❖The remaining $287,000 reduces Marge’s estate tax exemption. 

Assume that Marge dies in 2012 and has made no other gifts over the annual exclusion amount. 

In this scenario, Marge’s estate would have an estate tax exemption of $4,713,000: $5,000,000 minus $287,000.



2011 Q4 Estate and Gift Tax
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