Gifting 101

Gifting can be an effective component of your estate planning strategy, as it allows you to reduce the value of your overall estate (and your potential estate tax) while giving you the chance to share your wealth with your loved ones during your lifetime. With the lifetime exemption for gifts and estates at the highest amounts they have ever been, perhaps now more than ever it is time to consider gifting.

Here is some key information on gifting:

• Each taxpayer is permitted to give up to $15,000 (in cash or assets) per person to as many recipients as the taxpayer chooses without that gift being reportable in 2021. If you are married, you and your spouse can each gift up to $15,000 to a recipient ($30,000 total per person) in 2021. • If you decide to gift more than $15,000 to one or more individuals (other than your spouse) this year, you may have to file a gift tax return. By filing a gift tax return, the IRS will be able to track how much you have accumulated toward your lifetime exclusion (i.e., the amount you can gift without paying gift tax). For 2021, the lifetime exclusion for federal gift and estate taxes is $11.7 million for individuals and $23.4 million for married couples. • Keep in mind that you can give an unlimited amount of certain gifts without filing a gift tax return. Some examples include: medical expenses paid directly to a care provider, tuition paid directly to a qualified educational organization, political contributions, and charitable gifts to qualified charities, as defined by the IRS (e.g., religious organizations, nonprofits, etc.). • An individual can give a spouse who is a US citizen an unlimited amount and pay no gift tax. • The current lifetime exclusion is subject to adjustment for inflation through 2025, but then is set to decrease substantially after 2025 (the exclusion will be adjusted to $5 million, adjusting for inflation). Keep in mind, however, that Congress could change the law. Wealthy individuals may want to consider using their exclusion now to capture the most benefit before a possible change would occur. As we have advocated many times in the past, please consult both us and your estate planning professional for advice concerning this topic.

“Genuine generosity has no agenda.”

–Johnny Remick