Law office of Sonja M. Panajotovic

The gift tax exemption for one who dies in the year 2016 is $5.45 million per individual, up from $5.43 million in 2015. That means an individual can leave $5.45 million to heirs and pay no federal estate or gift tax. A married couple will be able to shield $10.9 million from federal estate and gift taxes! 

The gift tax exemption  applies to thevalue of the estate - meaning the gross estate reduced by allowable estate tax credits and deductions. If this "value" does not exceed $5,340,000 (or whatever the exemption amount is for the year of the death), then the estate will pass to the heirs free from federal estate taxes.

A Historical Look at The Estate Tax Exemption

Year    Estate Tax Exemption          

1997  $600,000                              

2001  $675,000                              

2002  $1,000,000                            

2004   $1,500,000                                  

2006    $2,000,000                                 

2009   $3,500,000                         

2011     $5,000,000                                     

2016     $5,450,000         

*Please note that State and Federal Tax Laws change frequently. Therefore, an update to your estate plan may be needed depending of the size of your estate the estate tax exemption.