Gifts can be a useful estate planning tool.
Tomorrow is Christmas eve, after all.
As such, gifts may be on your mind right now, especially if you are behind on your shopping.
A recent CBS Boston article titled “Our Families: Giving It Away,” reminds us how gift giving can be a good estate planning tool.
If you have more than this in assets, you will owe federal estate taxes.
Gifts can help.
If you are married, you and your spouse and give to one another without limit.
This includes gifts passed along in death.
Outside of marriage, there is a limit of annual gifting.
What is it?
$14,000 a year to as many individuals as your heart desires and your bank account can afford.
The amount doubles if you are married.
Together you can give $28,000.
Because this money will not be yours when you die, it will not be taxed as part of your estate.
By maximizing your gift exclusion, you reduce the amount of your taxable estate.
Can it get any better?
By using gifts as an estate planning tool, you can joyfully watch your grandchildren and children benefit from your generosity right now.
These gifts can also be used for medical insurance or tuition for your grandchildren.
When choosing this method, be sure to write the check directly to the school and not to your grandchild.
While using this estate planning tool, be sure you are giving within your means.
You will want to have money to take care of your own present and future needs.
In the end, you do not want the last "gift" given to your children to be taking care of or supporting you.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: CBS Boston (November 24, 2016) “Our Families: Giving It Away”