For the year 2017, the Federal estate and gift tax exemption will be $5.49 million per individual (this is an increase from $5.45 million in 2016). This means that an individual can give away $5.49 million during lifetime or at death without paying any Federal estate or gift tax. A married couple will be able to shield a combined total of $10.98 million from these taxes. Unlike our neighboring New England States, New Hampshire continues to avoid a State estate tax. If you own real estate in another State, be sure to inquire about the estate tax laws for that State, as this could subject you to another State’s tax.
For lifetime gifts made during 2017, the gift tax annual exclusion remains at $14,000, which is the same as last year. This is the amount that you can give to any individual during the year that will be excluded from gift tax. If you give more than $14,000 to an individual during 2017, you will use up some of your $5.49 million exemption, and you must file an informational gift tax return with the IRS. Keep in mind that spouses can “split gifts,” effectively allowing a tax free gift of $28,000 to an individual during the year, even if only one spouse provides all of the money for the gift. In order to take advantage of split gifts, a gift tax return must be filed.
The gift tax exclusion amount of $14,000 is not a safe harbor in the case of a Medicaid application. Gifts in any amount which are made within five years of a Medicaid application may result in disqualification for Medicaid benefits, as well as potential personal liability for the recipient of the gift.