Many people are curious about whether or not their estate will trigger a federal estate tax, especially as estate taxes may be revisited by legislators in the coming years. Gifting assets over the course of your life can help to reduce the total size of your taxable estate. Each time you make a gift, you can effectively reduce the overall value of your taxable estate. You can also transfer more than the gifting amount, but taxes apply at that point.
Instead of leaving the entirety of your assets to your loved ones after you pass away, you could gift these while you’re still alive. Every year, for example, you have the eligibility to give up to $18,000 per recipient per year, as of 2024.
For a married couple, this amount doubles per person receiving the gift. Furthermore, if payments are made directly to an institution for tuition purposes or medical expenses, those do not count towards the annual gifting eligibility. If you want to make the most of your regular gifting, it is best to discuss with an estate planning attorney who has familiarity in this area. You will gain greater confidence in your overall estate plan and determine a specific strategy most in line with your needs.
In addition to using a gifting strategy, you can also work with an estate attorney to create other strategies to protect your assets and reduce the overall size of your taxable estate.
Let our Pasadena estate planning lawyers guide you through the process. Reach out to schedule a meeting now.