Should I Be Gifting Assets at This Time?

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Gifting assets can help your estate planning.

You have been quite successful financially.

Your job pays well.

You have invested wisely.

In fact, you have more than you need.

According to a recent The National Law Review article titled “Is Now a Good Time to Make a Gift?,” gifting assets could benefit you and your loved ones, especially if your wealth exceeds the $11.58 million per person federal estate tax exemption.

Gifting assets can benefit your estate plan.
Gifting assets during an economic downturn could benefit your tax planning.

How can you do this?

You can make gifts outright or through a trust.

Taxes on these gifts depend on how much is given.

Individuals can give $15,000 per recipient each year without triggering a gift tax.

Couples can give $30,000 together per recipient.

If you exceed this limitation, then you will trigger gift taxes.

Nevertheless, you may  avoid paying taxes on the gifts in excess of the annual exclusion amount if you file a timely IRS Form 709 Federal Gift Tax Return.

This allows the IRS to keep track of your lifetime taxable gifts.

The amount exceeding the annual gift tax exclusion is subtracted from your available estate tax exemption at death.

In short, you already used this exemption and there is no “double dipping”.

If you do not exceed your annual gift exclusion, your estate tax exemption threshold is unaffected.

Estate tax exemptions can be tricky.

Although the exemption threshold is at $11.58 million per person in 2020, this amount can change.

The exemption was set at $5 million in 2010 and could easily return to this level (as adjusted for inflation).

Budgeting your exemptions is important because the federal estate tax starts at 18 percent and increases to 40 percent for anything above the exemption amount.


Gifting through a trust may prove beneficial with non-cash assets, while providing asset protection unavailable when making outright gifts.

Because many non-cash assets have depreciated in value during the pandemic, you can transfer more while staying under the annual gift tax exclusion.

By gifting assets through a trust, these depreciated non-cash assets will be able to appreciate in value outside of your estate free from the potential squandering, divorces, lawsuits, and bankruptcies of the trust beneficiary or beneficiaries.

Your loved ones will have larger gifts while you make tax-efficient and protected transfers.

Because what you do now impacts your estate, you should work with an experienced estate planning attorney to ensure your current actions do not undermine your future goals.

Reference: The National Law Review (April 10, 2020) “Is Now a Good Time to Make a Gift?”

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