When Does A Gift Save You Money?

Estate planning involves the assessment of various factors beyond the simple question of “Who gets what?” when you die.  Individuals who have estates worth anywhere near $5 million need to consider the estate tax consequences that may occur upon death.  Two very general methods of estate tax planning involve locking in value and removing assets from an estate, the goal of each being the reduction of the estate’s value at death.  A common way for individuals to “remove assets” from an estate is to make gifts during life.  For example, current tax law allows an individual to make gifts to others up to $14,000 per donee without subtracting from the donor’s exemption amount.  While “per donee exclusion” gifting is very common, there are more sophisticated means by which individuals may reduce the value of their estate over time and, hopefully, reduce the amount of estate tax assessed upon death.

As the end of the year draws closer, those looking to implement gifting strategies as a part of estate planning should consider their options.  For other ways to utilize gifting, read the article, Gifting Your Way to Lower Estate Taxes.

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