Effective January 1, 2013 Annual Exclusion Rate for Gifts Will Increase to $14,000

Effective January 1, 2013, the annual exclusion rate for gifts will increase to $14,000, up from $13,000 in 2012. What does this mean?

This means that a person can gift $14,000 per year to any individual without having to file a gift tax return. So I could gift $14,0000 to each of my children and my husband could also gift $14,000 to each child. So effectively a couple could transfer $28,000 to each child without having to file a gift tax return. Assuming the children are stable and can handle money appropriately, this may be a means, among others, to reduce the Minnesota estate tax that would be imposed on estates in excess of $1,000,000.

Kris L. Maser
Attorney at Law

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