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Planning around the estate and gift tax exemption limit

People in Atlanta with sizable estates should be aware of the estate and gift tax exemption limit. Since it was initially raised to $5 million in 2011 and indexed for inflation, it has risen slightly higher each year. For 2015, the estate and gift tax exemption limit is $5.43 million per person, and the limit is expected to rise to $5.45 million for 2016.

As long as individuals keep the value of their estates within the estate and gift tax exemption limit, their estates will not owe any federal estate tax after they die. Married couples can each claim their own exemption and protect a $10.9 million estate from being taxed in 2016. Spouses may transfer an unlimited amount of assets to each other tax free, and a surviving spouse may use the deceased spouse's unused exemption amount under the rules of portability.

If people have an estate that might be subject to federal estate tax when they die, they may choose to whittle down their estate during their lifetime by making annual tax-free gifts. Right now, a person can make as many annual gifts of $14,000 or less as they choose. These gifts will not count towards the federal estate and gift tax exemption limit.

An estate planning attorney may be able to help an individual or couple to mitigate their estate tax burden by setting up trusts or planning annual gifts. Even if a person's assets are worth more than the estate and gift tax exemption limit, there are often a variety of methods to help heirs from having to indirectly bear the estate tax burden on their inheritance.

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