Why put off for tomorrow what you can do today? That adage might ring true for your family, as you try to figure out how to enjoy giving funds to your family today, while potentially saving your family money down the line.
There are many advantages to making gifts to people or organizations, while you are still living, rather than do all of your gifting through your will, reports Tri-County Times in the article “Giving while living.”
Among the reasons is that annual gift-giving can be used to reduce estate taxes. Today’s annual tax break for gifts to individuals is $15,000, which is separate from the lifetime exclusion of $11.4 million per person. Married couples can shield $22.8 million.
Remember that you can give more than $15,000 as a gift, but you have to know the limits. It’s easy to go over this without needing to pay taxes on the gift, but you may need to file a gift tax return. Speak with your estate planning attorney about the limits and when a gift tax return needs to be filed.
You can also make gifts to reduce the size of your estate, without using your lifetime gift and estate tax exclusion, if you want to make certain gifts. Be certain to follow the rules and to pay the institutions directly, and not to the person.
Funding 529 accounts is a wonderful way to help the next generation achieve higher education, although those funds can now be used for other qualified educational expenses. There is a $15,000 annual gift limit, but you can bundle five year’s worth of $15,000 gift tax exemptions into an initial $75,000 contribution to one student’s 529 account.
Note that if you die in the five years after making the gift, a prorated amount of your gift will be put back into your estate, but only for tax purposes. The money remains in the 529 account.
Not all gifting is about taxes or inheritances. Special trips with the family make memories across generations and create strong family bonds. Create a vacation with more meaning than a theme park. If the family loves the outdoors, consider a long week in a nature preserve or spend a week volunteering with a reputable charitable group.
Talk with your estate planning attorney about how gifting can fit into your estate plan, while you are still around to enjoy seeing its impact. While you’re doing that, make sure your estate plan is up-to-date and that includes beneficiary designations. Check on how assets are titled and if trusts have been funded. Then, go plan a memorable family vacation.
Reference: Tri-County Times (April 25, 2019) “Giving while living”
I heard Cindy’s presentation at a Senior Luncheon at my church, and was very impressed. She helped my daughter and me understand many aspects of elder law. Josh has also been very helpful in my planning to enter an independent living situation . I have told many friends about them.
The very best elder law attorney and staff anyone could ever ask for! I have referred a number of clients to Cindy and she never disappoints. She is kind, caring, and extremely thorough in making sure everything is completed as it should be. I highly recommend Cindy for anyone needing lawyer services; she truly goes above and beyond for every client she helps and has had a huge impact in so many peoples’ lives. Thank you, Cindy and staff, for everything that you do- I’m so glad to know you!
Cindy and the Nelson Elder Care Law team are trustworthy and helpful. They are the experts in elder care law. At Leaf Cremation, we entrust our families to the care of the Nelson team when their services are needed.
Josh Nelson, and his staff, have been amazingly helpful to our family. The ins and outs of nursing homes, the rules and regulations that govern Medicare and Medicaid are daunting and the folks at Nelson Elder Care Law have been informative, responsive, and above all, empathetic. I cannot emphasize enough how their service has taken a weight off of our shoulders especially during a world pandemic that has targeted nursing homes across our country. I highly recommend retaining Josh and his firm!
I had a simple legal question to them that I needed answered and they very helpful in giving me the information I needed. I highly recommend them and will reach out to them if I need more advice or assistance. Thank you for taking your time to just answer a couple of questions I had!