One of the reasons people make a will or trust is to pass along wealth or financial security to a spouse, partner, child or other heirs. As part of passing along your legacy, you may want to maximize the amount you are able to leave behind by limiting the tax burden. If
may apply to your estate, annual gifting could be an important part of your estate plan.
Gifting can be an easy and fulfilling part of addressing the estate tax issue. However, the federal gift tax exclusion amount changes from time to time.
For information on some of the changes, refer to our section on
gifts and gifting.Prior to making 2018 gifts, check with a financial planner or CPA to confirm your understanding of the current gift tax exclusion amounts. The annual gift tax exclusion amount in the United States for 2018 is $15,000. The 2018 gifting limits generally apply to federal tax returns filed in 2019 for calendar year 2018. As part of financial planning, many people Gift Stock to Children.
2018 Gifting Amounts and Exclusions
These are the key numbers to know regarding 2018 gifting limits for purposes of estate planning:The gift tax exclusion amount for 2018 is $11,180,000 for an individual.The combined gift tax exclusion amount for a married couple for 2018 is $22,360,000.The 2018 annual exclusion for gifts is $15,000. Using gift splitting, married couples can gift $30,000 to any person or donee.A related type of tax to consider when making an estate plan is the generation skipping tax.If you are making gifts in 2019 or 2020 and are concerned about whether the gifting limits and exemption amounts will be different, review the limits and exemptions here:For gifts made during the 2019 tax year, check the 2019 Gifting Limits.For gifts made during the time period of January 1, 2020 through December 31, 2020, reference the
2020 Gifting Limits.
How Much Can Married Couple Gift in 2018?
If you have a spouse, you may be interested in using gift splitting as part of your estate tax strategy. This method allows a married couple to gift a total of $30,000 to any person or donee in 2018 using the annual gift tax exclusion amount.
Have the Gifting Limits Increased?
Yes. For the first time in several years, the gifting limits have increased. The gifting limits for 2018 increased from the exclusion amount for calendar year 2017, going from $14,000 to $15,000. This is a substantial change over the prior year.
2018 Gifts and Your Estate Plan
After learning about the increased gifting limits for 2018, you may be ready to make an immediate gift to someone important to you. Before you do, be aware there are alternatives to making an outright gift or transfer during your lifetime. A gift made while living is also known as an inter vivos gift. Unless you have a substantial net worth, you may not need to make inter vivos or lifetime gifts to reduce the size of your estate. However, estate tax exemption amounts are constantly in flux. Carefully review all Estate Tax Information first.
Alternatives to inter vivos gifts include leaving bequests as part of your estate planning documents, such as a will or trust. If you are unsure whether you want to make a gift in 2018 or would prefer to retain control of the money until after your death, review our section on wills and trusts.
The Role of Your Tax Advisor
Gifting to heirs and other beneficiaries can be emotionally satisfying. If you are in a position to make an annual gift or engage in gifting over a period of years, you have the potential to dramatically improve the lives of others. However, no gifting strategy should be implemented without proper consultation with a qualified professional. Prior to making a gift with estate taxes in mind, make sure you have considered your own income needs, including future medical and long term care expenses.Federal and state tax laws change frequently. The information you read on the Internet and in printed materials may not be accurate or up to date. In addition, information you read online and in books and articles is not tailored to your specific circumstances. Transfers of assets, property, and cash may be irrevocable. Financial transactions of any kind can have unforeseen tax consequences and impact eligibility for Medicaid and other government benefits. Always check with a tax professional and an attorney before making a gift or taking any steps to make an estate plan or engage in estate tax planning. Find a Tax Professional.Copyright 2020 Pennyborn.com. ALL RIGHTS RESERVED.Updated on December 23, 2019.
INFORMATION ON THIS SITE, INCLUDING ARTICLES, ESTATE PLANNING FORMS, AND THE ESTATE PLANNING BLOG, DOES NOT CONSTITUTE LEGAL, FINANCIAL OR TAX ADVICE. Pennyborn.com is not a law firm and is not a substitute for a lawyer. Your use of this site does not create an attorney-client relationship. Information on this site is for educational purposes only and may not be accurate, complete or up to date.
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