ESTATE AND GIFT TAXES

The Exclusion Amount is the amount of money each individual can give away, either at death or during his or her lifetime without incurring federal estate/gift taxes. For over a decade, the Exclusion Amount was set at $600,000, which essentially saved $192,800 of estate taxes. However, the current Exclusion Amount Schedule looks like this after recent legislation:

For Decedents Dying	Applicable Exclusion Amount
2008	$2,000,000
2009	$3,500,000
2010	Estate Taxes are Repealed for One Year

Effective January 1, 2002, the Exclusion Amount was raised to $1,000,000. The amount continues to rise until it reaches $3.5 million by 2009. Thereafter, the Estate Tax is repealed for a period of one year, from January 1 to December 31, 2010.

It is very important that each individual obtain competent legal advice in order to insure that he or she makes full use of the applicable Exclusion Amount. Married couples may effectively "lose" one of their Exclusion Amounts by having only simple wills or no wills at all. Inadequate planning can result in significantly greater estate tax liability.

An individual may make gifts during his or her lifetime in the aggregate amount of $1,000,000 without incurring gift taxes.  Additionally, an individual may make annual gifts of $11,000 without incurring gift taxes.  The annual exclusion amount will continue to rise with the inflation rate; however, increases will only be in thousand dollar increments, which means that the next increase may not happen for a few years.