Making Annual $14,000
What is the simplest estate planning tool around? Gifting! Make substantial
annual gifts now while you can control the funds with flexibility. Reap
the benefits and fun of being with your heirs and charities as they enjoy
For 2016 and 2017, anyone can gift $14,000 a year to anyone, with no income
or gift taxes. A few years ago, the limit began being raised from $10,000
to recognize the impact of inflation The recipients do not have to be
non-profit organizations. Many individuals make gifts to children or grandchildren,
but a relationship is not a requirement.
Making annual gifts can serve many purposes:
You can see the person receiving your gift use and enjoy it.
When you make the gift, that amount comes out of your ultimate taxable
estate. Depending on the size of your estate, it may be subject to tax
rates as high as 40%.
Transferring assets with annual gifts, instead of through your estate
at the time of death, also removes any growth in the value of the assets
from your taxable estate. Again, this can save substantial estate taxes.
Let us look at an example. Suppose you are 55 and are lucky enough to
have plenty of money to live on for the rest of your life. Will a return
of 5% on your total estate be more than enough for your daily needs, including
other current income? Then perhaps you are ready to take advantage of
this benefit. You have saved diligently. You have invested well. Now it
is time to reward yourself.
See the fruits of your labors being enjoyed now, as you stave off the
"tax man." How does it work? Simple! Write a check (or re-title
a stock or bond holding) worth up to $14,000 annually to as many individuals
as you would like. In fact, couples can gift $28,000 together to each
recipient annually and the number of recipients is limited only by your
means and desires.
If you want to give even more, and, of course, want to do it without affecting
anyone's tax situation, consider paying tuition directly to your heir's
educational institution. These amounts do not count against the annual
$14,000. What a great back-to-school or graduation gift! And, a $14,000
would be a most valuable holiday gift.
Be aware that these gifts need an informational report to the Internal
Revenue Service. You cannot go back and use this annual benefit if you
forgot to do it last year. So, plan well. Remember, before year's end,
to take advantage of this simple estate planning tool.