Full-Service Harrisburg Law Firm – Specialized Legal Counsel

Purcell Krug & Haller
Call 866-586-6058 or 717-260-3485

Gifting during the holidays can be good for your estate tax

We've covered before that many people never have to worry about the federal estate tax since the threshold is over $5 million. It doesn't take that much these days to reach the threshold, though, especially if you own some property, a farm or a business. If you're worried you might hit the threshold and face up to 40 percent federal estate taxes, then consider a life-time habit of cash giving.

Cash giving now lets you pass on wealth that would otherwise be given to your heirs in the future, and you can do it without incurring a major tax burden. To do so, though, you have to stay within both the annual requirements and the lifetime requirements.

The exclusion amount for cash gifts changes from year to year, making it essential that you work with professionals to manage your money and estate matters. In 2016, the exclusion is $14,000 per person, which means you can give each person cash up to that amount as a gift without incurring taxes on it.

You also have to keep cash giving within a lifetime maximum, which is another reason to work with professional estate lawyers. They can help you understand how that lifetime amount accrues and whether the timing of your gifts change that accrual.

The holidays are one time where you might want to gift cash or cash-value items such as stocks to loved ones. If you are giving large amounts, talk to your attorney about how to track the giving in a way that can be used later to reduce estate tax burdens without approaching gift tax exclusion amounts.

Source: FindLaw, "Reducing Estate Tax - Gifts," accessed Dec. 16, 2016

No Comments

Leave a comment
Comment Information