LawInfo

The federal government allows every person to give away, either through lifetime gifts or upon death up to $1 million without being taxed. This is known as your Lifetime Exemption. This Credit effectively shields $1 million of assets and changes in the upcoming years as outline above.

Any assets amounting to more than $1 million are then taxed at a progressive Estate Tax.

Certain transfers are not counted toward the $1 million such as a gift of $11,000 (in 2002 and 2003) or less made by you to any person per year, or gifts given to pay for tuition or medical expenses.

However, the Internal Revenue Code allows any married person to gift, or leave at death, to their spouse an unlimited amount of assets in millions or billions, it makes no difference. This is called the Unlimited Marital Deduction. Because of this law, couples typically have reciprocal Wills which give their property to the other spouse, with the assets going to the children after the surviving spouse`s death.

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