Q. Assuming that the federal lifetime gift tax exemption in 2013 is $1 million by every donor, would a married couple’s lifetime exemption be $2 million provided the couple agree to split gift?

Karin Price Mueller for the StarLedger writes: Answer:  You’ve got it slightly wrong.

Remember the fiscal cliff?

The legislation signed earlier this year to avert the predicted doom — The American Taxpayer Relief Act — created some changes for gifting.

"Among many provisions, the Act made permanent the $5 million exclusion for estate and gift taxes, and increases that amount to account for inflation going forward," said Michael Green, a certified financial planner with Wechter Feldman Wealth Management in Parsippany. "For 2013, the exclusion will be $5.25 million per individual."

Green said if a married couple agrees to gift splitting, the total lifetime gift exclusion is $10.5 million this year.

But, Green says, don’t forget there is an annual gift tax exclusion of $14,000 for an individual or $28,000 if gift splitting.

"A gift tax return is required to be filed if the annual exclusion is exceeded and any gift amount over the annual exclusion is counted against the lifetime exemption," he said. "There will be no taxes owed on gifts unless the lifetime exemption has been reached."

Remember that direct payments of educational or medical costs also do not count toward the lifetime exemption, said Mark Ukrainskyj of Covenant Asset Management in Chester.

He said the lifetime gift exclusion is portable between spouses.

That means that if the first spouse dies without using up his or her full exemption, then the surviving spouse gets to add that amount to their exemption.

"So in effect, the lifetime exemption for a married couple would be $10.5 million — before accounting for any applicable inflation adjustments."

However, keep in mind that this does not impact your state gift and estate tax exemption, Ukrainskyj said.

"Each state sets its own limit. Some have chosen to go with the new Federal levels, while others have not," he said. "New Jersey’s estate tax exemption was frozen at the 2001 level of $675,000. So while you may owe no federal estate tax, you may owe a state estate tax."

Make sure to check with your tax preparer before making any big moves.