Lifetime giving can have estate planning benefits.
In just a week, it will be Halloween.
Children will be dressed in costumes to go trick-or-treating with parents.
Adults will leave their house lights on to give candy to these little visitors.
In fact, the last three months of the year carry with them a uniquely “giving” spirit.
According to a recent Kiplinger article titled “To Gift or Not to Gift,” giving does not need to be restricted to family holidays or at your passing.
You can give gifts and assets while you are alive.
Giving has numerous benefits.
What are they?
Want to minimize estate taxation?
From an estate planning perspective, planned gifts can help avoid estate taxes.
The current federal exemption limit is $11.4 million.
In 2026, some are concerned that this exemption to drop to $6 million per individual.
All tax law is subject to political whims and predelections, after all.
Most people will not be affected by this.
However, these individuals may be impacted by states estate taxes.
The District of Columbia and 12 states currently levy an estate tax.
By making lifetime gifts, you could reduce our taxable estate and save on tax.
Be sure you are strategic in your giving.
If you do not, you could trigger negative consequences.
For example, giving away real estate could incur a capital gains tax by canceling out the “step-up” in basis triggered when you die.
Need to qualify for Medicaid?
Medicaid can help pay nursing home expenses if you do not have long-term care insurance.
There are income and asset qualifications in order to qualify.
What are they?
For singles in a nursing home, you need can only have $2,000 in countable assets (but this varies by state).
If you are married with a spouse living at home, the limit is $128,000.
Giving needs to be done within a certain time frame because there is a five-year look back period.
The government does not want to be cheated.
If you will need Medicaid, work with an experienced elder law attorney to help you prepare your finances and your paperwork.
Want to see you family flourish?
Watching loved ones open presents or use your generosity for good is priceless.
You can set your loved ones up for success by helping with expenses they are facing now.
Helping with school loans, mortgage bills, or car payments can have lasting benefits for the ones you love.
There are rules and considerations when it comes to lifetime giving.
What are they?
If you give more than $15,000 to an individual in a year, you will need to file a gift tax return.
Even if you do not owe taxes on this, you will need to file a return to keep track of gifts made during your lifetime.
These cannot exceed the federal estate tax limit or you will owe a gift tax.
Work with an experienced estate planning attorney to ensure your lifetime giving works for rather than against your estate planning goals.
Reference: Kiplinger (September 10, 2019) “To Gift or Not to Gift”