Wills, Trusts & Estates: Plain and Simple – Year End Gifting

December 16, 2019

Now is the time that many people think about gifting to loved ones, especially with the holidays upon us. In addition to making you, as well as the beneficiary of your gift, feel good, lifetime gifts can help reduce your potential estate tax at death.

Federal law permits you to make gifts valued up to $15,000 each year to as many people as you desire ($30,000 between spouses). This is a per-recipient amount, not a collective cap. The recipients do not need to be related to the gift-giver. These “annual exclusion gifts” do not use up any of your federal exclusion from gift and estate taxes ($11.4 million in 2019, $22.8 million for couples). In addition, you can also make direct payments for a loved one’s tuition, medical expenses and health insurance premiums, which don’t use up any of your annual exclusion amount for gifts, or any of your federal $11.4 million gift and estate tax exclusion amount.

A gift made sooner rather than later also means that the appreciation on the property gifted passes to your beneficiary free of gift and estate tax consequences to you. This is of particular importance when the gift is comprised of real estate, artwork or stocks, which is likely to have increased in value since it was initially acquired. It is important to note, however, that a gift of appreciated property carries with it “built in” capital gain (generally, the difference between what you paid for it and the price at which the property is eventually sold).

Reprinted with permission from Lloyd Harbor Life, December 2019. 

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