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You can lower the value of your estate with gifts

| Jan 29, 2020 | Estate And Gift Tax Planning |

When you’re getting older and want to make sure that your estate is not so large that you face taxes, one of the options is to take advantage of the gift tax. The gift tax allows you to give gifts to others up to an allowable amount annually. You don’t have to report those gifts to the Internal Revenue Service (IRS) as long as they are under the legal amount.

In 2019, the total you could give away in gifts without reporting them to the IRS was $15,000 per person or up to $30,000 for spouses who are giving a gift. Gifts of this amount can be given to as many people as you want, giving you an amazing opportunity to lower the value of your estate.

Did you know that you can also give the gift of medical expense compensation or tuition without limits?

The government allows you to give, in addition to other gifts, an unlimited amount in qualified tuition. You can also give an unlimited amount for medical expenses to someone you know or care about. Keep in mind that medical or educational expenses need to be paid directly to the provider.

Why is gifting an important part of estate planning?

When you give gifts, you’re lowering the value of your estate. While many estates won’t be taxed, if yours is large enough to be taxed by the government, you may want to start giving gifts to reduce its value. This tax-free manner of giving away assets is a perfect example of how to use the law to your benefit.