Estate and Gift Tax Planning

February 1, 2016 by Pete Finch
Copeland Buhl

With the kick-off of the New Year, now is a good time to review your estate plan to make sure your wishes will be followed in the event of an untimely death or disability. You deserve the assurance that your assets will be transferred to those you intend in the least stressful manner for your loved ones while minimizing taxes and future administrative expenses. Listed below are a few simple housecleaning ideas and planning opportunities you may want to consider.


One of the simplest ways to reduce any potential future estate tax liability is to take advantage of gifts that will not reduce your lifetime tax exclusion amount ($5,450,000 for 2016, amount doubles to $10,900,000 for married couples that elect to carry over a Deceased Spouse Unused Exemption.

Annual Exclusion Gifting – Every taxpayer can make annual exclusion gifts (up to $14,000 for tax years 2013-2016) to an unlimited amount of donees each year. The annual exclusion amount is a “use it or lose it” exclusion that is lost if not used by the end of each calendar year. When pairing annual exclusion gifting with a spouse, donors can transfer $28,000 (2016) to each donee in a given year. If the donee is also married, the married couple can give each spouse $28,000, raising the excluded gift to $56,000 (2016).

Tuition Exclusion – Gift tax does not apply to amounts paid for tuition directly to a qualifying educational institution on behalf of an individual (donee). Amounts paid for books, room, board, supplies or entertainment are not eligible for the exclusion.

Medical Exclusion – Gift tax does not apply to amounts paid directly to a medical care provider for qualifying medical expenses for an individual (donee). Amounts paid for medical insurance also qualify.


If you do not want the court to decide where your assets will go upon your passing or if your wishes have changed over the years, it is a good idea to review how your assets are currently titled and who they will pass to when you’re gone.

Non-probate Transfers – “Non-probate Property” is property that does not require a court to transfer title after the owner passes away. Non-probate transfers include:

  • Joint Tenancy – property transfers to the surviving joint tenant on the death of the first
  • Beneficiary Designations under Contract – Life Insurance, Annuities and Retirement Accounts typically have beneficiary designations under the contract.  Bank and Investment Accounts may have a “payable on death” (POD) or “transfer on death” (TOD) designation.
  • Trusts – property held in a trust follows the terms of the trust agreement

Probate Transfers – property titled in your own name must go through probate after the owner’s death. Probate is the process of the court appointing a personal representative, giving that person the authority to transfer the decedent’s property to the beneficiaries entitled to it either under a Will or the Intestate laws (laws that govern the distribution of property if there is no Will). The time, expense and stress on your loved ones of going through the probate process can be avoided through proper titling of your assets (see non-probate transfers above).