Many key Estate and Gift Tax exemptions and exclusions are indexed for inflation by the IRS. The IRS recently released Rev. Proc. 2014-61 which provides for the following modifications for these key exemptions and exclusions:

  • Unified Credit for Estate Tax: $5,430,000 for decedents dying in 2015[1]
  • Annual Exclusion Gifts: $14,000[2]
  • Annual Exclusion Gifts for Non-Citizen Spouses: $147,000 for transfers in 2015
  • Aggregate Allowable Decrease for Special Use Property (i.e. farmland, etc.): $1,100,000 in 2015.

The New Jersey Estate and Inheritance Taxes are not indexed by the IRS. The New Jersey Estate Tax Exemption remains $675,000, while the New Jersey Inheritance Tax can affect transfers of $500 or more.

In addition Rev. Proc. 2014-61 provided the following income tax brackets for Estates and Trusts:

Taxable Income: The Tax is:
Not over $2,500 15% of the taxable income
Over $2,500 but less than $5,900 $375 plus 25% of the excess over $2,500
Over $5,900 but less than $9,050 $1,225 plus 28% of the excess over $5,900
Over $9,050 but less than $12,300 $2,107 plus 33% of the excess over $9,050
Over $12,300 $3,179.50 plus 39.6% of the excess over $12,300

 

These exemptions, exclusions and rates have an important impact on how estates and trusts are structured, and should be considered for every Estate Plan. If you have any questions on how these rates affect you, please contact our Trusts and Estates department for a consultation.


[1] While indexed for inflation this Credit only increases in $10,000 increments.

[2] While also indexed, annual exclusion gifts only increase in $1,000 increments.