Estate Tax Planning Changes for 2014

Like most years, the Internal Revenue Service instituted an annual inflation adjustment for a number of tax provisions. A couple of these changes are particularly important and noteworthy for estate planning purposes. Which tax changes are going to affect your estate plan in 2014?

For starters, high net worth estates received some good news as the basic estate tax exclusion for decedents increased from $5.25 million in 2013, to $5.34 million for those who die in 2014. That is, individuals may pass up to $5.34 million worth of assets, without being subject to the Federal estate tax. This also means that couples now have the potential to pass $10.68 million to their beneficiaries free of the Federal Estate Tax.

The annual gift tax exclusion remains at $14,000 for the 2014 tax year. That is, for a gift to be excluded from the gift tax (for that person receiving the gift), the amount of the gift made must be $14,000 or less. Additionally, gifts made during a persons’ life ultimately cumulate and count against their individual estate tax exclusion upon their death.

Finally, it is important to keep in mind that the basis rules on property and gifts still applies. Remember that a gift made during ones’ life generally transfers the income tax basis of such asset of the donor to the donee, offering no income tax advantage to either party. However, for property that passes pursuant to an inheritance (except for retirement accounts), the donee’s basis in the property is “stepped up” to the asset value at the time of the donor’s death.

As we mentioned in a previous article, now is a terrific time to update your existing estate plan or to start the estate planning process, as there is more certainty in the estate tax arena. For a complete listing of all tax adjustments for the 2014 tax year, see IRS Revenue Procedure 2013-35. Please call us at 816.931.2700 to schedule an appointment to review your estate plan or to schedule an initial estate planning consultation.

Contact Steve Bahr at or 816-931-2700.