Estate and Gift Tax Applicable Exclusion:
The amount that can be passed free of federal tax. Whatever amount is used during lifetime is no longer available for use to pass assets at death. The Estate and Gift Tax Applicable Exclusion is currently $5.5 million.
Annual Gift Tax Exclusion:
The amount that can be given to each person you want without using any Applicable Exclusion. The Annual Gift Tax Exclusion is currently $14,000.
Generation-Skipping Tax Exemption:
This allows for giving to people who are grandchildren or other “skip persons.” It may also be used as a sophisticated way of avoiding Federal estate tax at the death of a child. Each person currently has $5.5 million of Generation-Skipping Tax Exemption.
State Estate Tax:
In addition to the Federal Estate Tax, many states have a State Estate or Inheritance Tax. Fortunately, Virginia does not have State Estate and Inheritance Tax. However, if you own property in other states, the State Estate and Inheritance Tax may apply, although at a much lower level than the federal tax.