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What is the applicable exclusion amount?


The applicable exclusion amount effectively exempts a certain amount from the federal gift and estate tax. In other words, if you are a U.S. citizen or resident, you will be able to leave a certain amount of your property free from this tax.

Here is the current table:

Estates of those who die during:The applicable exclusion amount is:
2011$5,000,000 plus any deceased spousal unused exemption amount
2012$5,120,000 plus any deceased spousal unused exemption amount
2013$5,250,000 plus any deceased spousal unused exemption amount

Generally, any portion of the applicable exclusion amount used for gift tax purposes effectively reduces the applicable exclusion amount that will be available for estate tax purposes.

It is especially important for spouses to understand the applicable exclusion amount. For 2011 and later years, the applicable exclusion amount is portable. That means that each spouse is entitled to an applicable exclusion amount (referred in this context as the basic exclusion amount). If the estate of the first spouse to die does not use all of its applicable exclusion amount, the executor can elect to transfer the unused portion to the surviving spouse. The surviving spouse's estate can then add this unused portion to its own basic exclusion amount. The sum is referred to as the applicable exclusion amount. So, for example, say that Husband dies in 2011 and his estate uses $3 million of its basic exclusion amount, and the executor of the Husband's estate elects to transfer the balance of $2 million to the Wife. The Wife dies in 2013. Her estate is entitled to an applicable exclusion amount of $7,250,000 (her own basic exclusion amount of $5,250,000 plus Husband's unused portion of $2 million).

Information provided has been prepared from sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Data and information is provided for informational purposes only, and is not intended for solicitation or trading purposes. Please consult your tax and legal advisors regarding your individual situation. Neither AXA Equitable nor any of the data provided by AXA Equitable or its content providers, such as Broadridge Investor Communication Solutions, Inc., shall be liable for any errors or delays in the content, or for the actions taken in reliance therein. By accessing the AXA Equitable website, a user agrees to abide by the terms and conditions of the site including not redistributing the information found therein.

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GE 37323 (03/2007)