Many people forget that in 2013, the annual gift tax exemption has was increased to $14,000, up from $13,000 last year. That’s due to an adjustment for inflation.
This means that you can give any person $14,000 this year without any gift tax liability at all. Making annual gifts of the exemption amount is one of the best and easiest forms of estate planning, because it transfers assets from one generation to the next without any tax liability whatsoever.
If you have multiple heirs, the amount you can give away tax-free multiplies quickly. For instance, if you have two children, and each child is married and has two children, you can give $14,000 to each child, spouse and grandchild. That’s eight recipients at $14,000 each, or a potential maximum gift of $112,000 a year.
Keep in mind that a spouse can also make gifts. If your spouse gave an additional $14,000 to each recipient, that would be $224,000.
If you’re thinking about making regular annual gifts, you might want to consider setting up trusts for the beneficiaries and making gifts to the trusts – especially if your grandchildren are young.
Making annual gifts to trusts is more complicated, and there are special techniques that usually must be followed in order to obtain the best tax treatment. However, there are many practical as well as tax benefits to making gifts by means of a trust, and doing so can further increase the value of your gifts.
There are four basic planning needs for all individuals independent of income, assets, debts, health, age or status. They are the Will or Will with Testamentary Trust, a Living Will,Financial Power of Attorney, and a Health Care Power of Attorney. These documents are perhaps the most important legal documents the average American will ever sign. Yet, the overwhelming majority of adults in the United States do not have one or the other. There are many misconceptions as to whether someone needs estate planning. To learn more, click the subject areas above. I am sure you will gain an understanding of the importance an estate plan plays in all our lives.
Thank you for visiting us on the web, we look forward to serving you. Call (919) 424-8319and schedule an appointment. Please make sure to bring any prior estate planning documents with you.
The Law Corner Attorneys help people all over Wake County to include the following areas: Knightdale, Wake Forest, Raleigh, Morrisville, Apex, Wendell, Zebulon, New Hope,Cary, Rolesville, Fuquay-Varina, Holly Springs, and Garner.