By now, most wealthy people know that the current gift tax exemption lifetime limit of $5.12 million is scheduled to decrease at the end of the current year if Congress does not intervene. If you did not already know that, consider this your warning. If you do not already have one, now is the time to set up a gifting program. However, a good gifting plan is not as simple as just giving away the maximum amount of money that you can.
Before gifting anything, you need to consider how much you can afford to give away. To know that, you will need to make an estimate of how much money you will need for your own retirement. Obviously, if you will need the money later, you should not give it away now. Another thing you need to consider is that the IRS has rules that need to be followed when gifting. If you break one of the rules, then your estate or you might have to pay tax on the money that was gifted. Some of the rules are complicated, especially when large amounts of money are involved.
Talk to an experienced and qualified estate planning attorney about the best way for you to take advantage of the current lifetime exemption for the gift tax.
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