How will gift and estate taxes change over the years?
An individual can make gift transfers free of estate or gift tax as long as the value of those gifts are no more than a certain amount. This amount is called the “exclusion amount”. There is an exclusion amount for gift tax and a separate one for estate tax. Each year these amounts change according to the Internal Revenue Code passed by Congress. Effective in 2004, for the first time in many years the gift tax exclusion amount and the estate tax exclusion amount are NOT the same. For 2004 and beyond, the gift tax exclusion amount is $1,000,000. The estate tax exclusion amount for those dying in 2007 or 2008 is $2,000,000. This means that if you made gift transfers during your lifetime totaling less than $1,000,000, you will not have to pay gift tax on those transfers in 2004 or later, but a large gift, in excess of the $12,000 annual exclusion, will reduce the amount that you can leave estate tax free when you die. According to current federal law, the gift tax lifetime exclusion amoun
