Annual Gifting As Part Of Your Estate Plan
Last updated on September 15, 2023
Many individuals are interested in reducing their exposure to estate taxes by transferring cash and other assets to family members. By making yearly or one-time gifts, they seek to decrease their estate, and in so doing, reduce the amount of estate taxes that will be due upon death.
Federal laws governing gift taxes are highly complex and continually evolving. To ensure you understand the current laws and any negative impacts your gifts could potentially have on your estate plan as a whole, speak with an experienced estate planning attorney at Brown Borkowski & Morrow. From our office in Farmington Hills, we offer tailored legal advice designed to help each client reach his or her estate plan goals.
Annual Exclusion Gifting
The annual gift tax exclusion is the amount you may give to another person within a calendar year without gift tax consequences. For example, in 2021, the exclusion amount is set at $15,000 per person. That means an individual could give $15,000 to each of child or $30,000 if the individual was married during that year or $60,000 if both the individual and the child were married during that year without being subject to gift taxes. The annual exclusion amount is revised periodically, so it is important that you have the most current information before gifting any assets. The annual gift tax exclusion amount will rise to $16,000 in 2022.
Annual exclusion gifting is common when parents want to gift money, corporate interests, shares of stock and other assets to their children.
However, many people do not realize that once they gift an asset, they completely give up control over it. The receiver has full authority to make decisions regarding the gifted asset from that point on.
Lifetime Exclusion Credit
If you gift more than the annual exclusion amount in a single year, a gift tax will apply to the excess amount and a gift tax return must be filed. However, the law allows you to make cumulative excess gifts of up to $11,700,00 (2021) over your lifetime before any gift tax is due. However, any excess gifts will reduce the amount that passes to your heirs free of federal estate tax upon your death. The lifetime exclusion amount is reviewed annually increases with inflation.
Serving Detroit, Oakland County And All Of Michigan
While annual gifting can be an effective way to reduce your estate, it is not always the best move. For skilled guidance regarding the most beneficial way to help you reach your estate planning goals, meet with our attorneys. Contact us for a free initial consultation with an experienced Detroit estate tax attorney. Call 888-757-1681 or contact us online today.
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