Giving can benefit you and the recipient.
You are successful.
In fact, you have more than you need.
You want to be purposeful in how you use your finances.
According to a recent The Street article titled “This Is the Golden Age of Tax-Free Gift Giving,” intentional generosity is a great option.
By strategic giving you can benefit your tax situation as well as help support family or a beloved charity.
The federal government has been taxing estates since the roaring 20s.
The exemption level was raised this year to $11.4 million for individuals and $22.8 million for married couples.
What happens if your estate is greater than those limits?
The amount in excess will be taxed at 40 percent.
Although the estate exemption is high now, this is not a guarantee in the future.
Reducing your taxable estate does not hurt.
Are there laws governing gifts?
There are laws governing just about everything.
What are they?
You can currently make a tax-free “annual exclusion” gift for an up to $15,000 to as many people as you wish.
There are some leveraged ways to give more.
For example, you and your spouse could combine your gifts to provide your child with $30,000.
You could also do the same for the spouse of the child.
You get the idea.
Another way to give is to place the gift in a trust to protect it from creditors or a former spouse, if your beneficiary happens to be in debt or divorced.
Are you feeling particularly generous?
If yes, you could utilize a “grantor” trust to take on the tax liability for any income the gift generates.
If you want to give, but are not sure how to do so wisely, work with an experienced estate planning attorney.
He or she will be able to help you navigate your estate planning and your tax implications.
Reference: The Street (February 7, 2019) “This Is the Golden Age of Tax-Free Gift Giving”