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Lifetime Estate Tax Exemption and Annual Exclusion Increase Next Year

10-25-2017 - Effective January 1, 2018, the federal lifetime estate tax exemption will increase to $5,600,000 per individual (up from $5,490,000). This is the total amount of tax-free money an individual may pass during his/her lifetime and/or at death. Read more about federal estate taxes here.

Married couples can double this amount and pass $11,200,000 estate tax-free. If a spouse has not used up the individual exemption at death, the surviving spouse may combine the unused amount with his/her own exemption. To claim a deceased spouse's unused exemption, the decedent's estate must file a federal estate tax return and take the "portability" election within nine months.

The annual estate and gift tax exclusion will also increase in 2018, from $14,000 to $15,000. As much as $15,000 may be given to any one individual, to as many individuals as you wish, without affecting your lifetime exemption. Married couples can double that amount. You are not limited to $15,000 if you want to pay for someone's medical expenses or tuition, so long as the money goes directly to the medical or educational provider.

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