❖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