Many New Jersey area residents take advantage of the gift tax each year. The IRS recently announced the amounts of the estate and gift tax limits for 2018.
Starting in 2018, the estate and gift tax exemption is $5.6 million for each individual or $11.2 million for a couple. This is up from $5.49 million in 2017. The annual gift exclusion is up to $15,000 in 2018, compared to $14,000 for 2017. These gift exclusions can be given to multiple people, so a husband and wife could give $15,000 each to each grandkid, for example. And, although New Jersey repealed its estate tax in 2018, it still has an inheritance tax. Because of this tax, making gifts while a person is still alive is often a tax-advantageous maneuver.
There are many tax-advantageous strategies that a person has access to when working through the estate planning process, and these often include using the estate and gift tax limits. An attorney who understands the complex nature of estate law may be able to offer their client various strategies to preserve their assets for future generations and establishing a legacy that lasts for years.
Many couples use the estate and gift tax limits to reduce the amount in their estate to avoid paying estate taxes. These are strategies that make sense for a family to preserve their assets for future generations and fund various charitable organizations, all while minimizing the amount that goes to the government. And, with tax reform potentially looming, New Jersey residents may want to look into this issue sooner rather than later.
Source: forbes.com, "IRS announces 2018 estate and gift tax limits: $11.2 million per couple", Ashlea Ebeling, Oct. 19, 2017