One of the easiest estate planning tricks to take advantage of is the gift tax exemption limit. This limit allows you to give away a portion of your estate each year to family members without having to pay additional estate taxes. While giving away gifts is an easy estate planning tool to use, a lot of people ignore it even though there are several simple steps you can take to implement such a plan.
Know your limits.
A good plan starts by knowing how much you can, should, and should not give away. Estate tax limits set yearly maximum gift amounts as well as a lifetime gift limit. You should talk to your attorney so you know what the current limits are. Once you know the limits you can then begin planning on yearly gifts.
Select the recipients.
The yearly gift limit applies to individuals, which means you can give up to the maximum individual amount per person per year. To maximize your gift-giving strategy you should select as many people as are appropriate. Typically this involves selecting children, grandchildren, or other family members who you want to gift some of your property to.
Use predetermined gift-giving opportunities.
Remembering to give gifts each year is much easier when you do so on birthdays or regular holidays. It’s easy, for example, to give half of the gift on a recipient’s birthday and the other half at Christmas or another holiday.
A gift plan can be an important, tax saving strategy in a comprehensive estate plan. To ascertain whether it is right for you, consult with an experienced and qualified estate planning attorney.