The maximum amount that an individual can shelter from federal estate tax (other than the marital or charitable deductions) is which of the following?

The maximum amount that an individual can shelter from federal estate tax (other than the marital or charitable deductions) is which of the following?

• A. $10,000 as indexed for inflation.
• B. $15,000,000 as indexed for inflation.
• C. $1,000,000 as indexed for inflation.
• D. Unlimited

Answer: (B)

The key idea is the federal estate tax exemption, the amount you can pass free from federal estate tax. This is the personal shelter available to an individual, separate from any deductions for a spouse or charity. That exemption is adjusted for inflation, so it rises over time rather than staying fixed. Any value up to that exemption amount can pass without estate tax; amounts above it are potentially taxed at the estate tax rates. In this question, the option that reflects that inflation-adjusted shelter amount is the one described as the exemption amount, indexed for inflation. The other dollar figures are either too small or not applicable because the exemption is not unlimited. Also, while there are unlimited or very large deductions for transferring to a spouse or to charity, those are separate from the personal shelter being asked about here.

The key idea is the federal estate tax exemption, the amount you can pass free from federal estate tax. This is the personal shelter available to an individual, separate from any deductions for a spouse or charity. That exemption is adjusted for inflation, so it rises over time rather than staying fixed. Any value up to that exemption amount can pass without estate tax; amounts above it are potentially taxed at the estate tax rates.

In this question, the option that reflects that inflation-adjusted shelter amount is the one described as the exemption amount, indexed for inflation. The other dollar figures are either too small or not applicable because the exemption is not unlimited. Also, while there are unlimited or very large deductions for transferring to a spouse or to charity, those are separate from the personal shelter being asked about here.