How can you reduce your taxable estate without utilizing your lifetime estate tax exemption or “Unified Credit? —Give tax-free monetary gifts to your loved ones.
Unlike the presents you give during the holidays…everyone in your family is guaranteed to like this kind of gift.
When you use estate gifting within the annual gift tax exclusion, you can give up to $14K per donor, per donee…and you don’t need to file a gift return. You can even “split gifts”, whereby you and your spouse combine your exclusions to increase your generosity to as much as $28K per person. That means you can give $28K each to your son or daughter, their spouse and their children, so for a family of four that’s $112,000 per year.
If you’re really feeling generous during the holidays, give a gift to each on or before 12/31 and again on 01/01 —that counts as two separate years.
Donate funds to a 529 Plan.
For the children in your family, contributions to a 529 plan provide them with tax-free gifts for their education. You can start the plan with a lump sum contribution up to $70K and spread it over five years (5 X $14K – contribution year plus 4 subsequent years). Withdrawals are tax-free as long as they are used for educational purposes. Plus, the 529 Plan grows tax-free. There may also be state income tax benefits available for plans offered by your state of residence.
Give without Limits.
Unlimited gifts can be given (i.e. no annual limit) to IRS-approved charities, your spouse, if you make direct payments to a medical provider for someone else, or direct payments to an educational institution for someone else’s tuition.
For more information about keeping your family’s estate intact with tax-free giving or another area of accounting, please contact Victor C. Belgiorno at 516-861-3704 or or Bob Jahelka at 516-861-3707 or .