estate planning chandler AZ

The Gift Tax? Questions of Life or Death

The Tax Cuts and Jobs Act raised the lifetime exclusion limits for estate and gift taxes from roughly $5.5 million per individual to over $11 million.

Also, the annual gift tax exemption was raised to $15,000 for individuals & $30,000 per couple. If the gift exceeds the annual exemption, the amount is applied against the donor’s lifetime gift limit. Essentially, the amount applied to the lifetime limit will affect the calculation of the donor’s estate tax.

People can choose to gift while they are living or including it in their estate plan for dispersal upon death.

Things to Consider: When giving while living

  • Assist heirs now & see the benefit of the gift
  • Potential to avoid or lower future estate taxes
  • Move assets to family members with not as much of creditor risk
  • Shift the tax load to family members in lesser tax brackets
  • Take advantage of specific valuation discounts when relocating family-owned businesses & farms
  • Potential to minimize state taxes in states where lifetime gifts are not taxed

Things to Consider:  Transferring assets at death

  • Ability to preserve control or utilize assets while still alive
  • Preserve the step-up in cost basis of assets upon death (For lifetime gifts, recipients inherit the original cost basis of the assets. Heirs receiving assets upon death assume date-of-death cost basis.)
  • Gifts made during your life could depreciate in value
  • Future policy changes could impact gifts. (If the federal gift and the estate tax is repealed in the future, lifetime gifts may not be appropriate.)

Time to Examine Your Estate Plan!

To fully comprehend how estate tax & gift tax rules can affect your personal financial plan, it is imperative to speak with a CERTIFIED FINANCIAL PLANNER®. Those who are considering advanced planning strategies around estates & gifting should work with a qualified Wealthnest advisor who has knowledge of their financial situation and goals.