Each person is allowed to make gifts of up $13,000 per recipient per year free of federal gift and estate taxes. The gifts can be made to an unlimited amount of people. A man and wife can each give $13,000; making the limit $26,000 for a married couple.
Use of the gift tax exclusion can take a large estate out of taxable territory without gift taxes. As an example let’s assume the federal estate tax exclusion is 1 million; you currently have a taxable estate of 1.5 million, and have 4 children and 6 grandchildren. You could give each of your children and grandchildren 13,000 per year for 4 years ($13,000 x 10 recipients x 4 years) and eliminate future taxes on your estate.
Be sure to consult a tax professional before making such a move; especially since Congress keeps changing the federal estate tax exemption amount.
| AAAMP Blog by Ken Faulkenberry | |
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Ken Faulkenberry earned an MBA from the University of Southern California (USC) Marshall School of Business with an emphasis in investments. Ken has 25 years of investment experience and is dedicated to helping people with self-directed investment management through the Arbor Investment Planner. His asset allocation strategies have an outstanding performance record. |
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