Reduce Estate Taxes for Family Give Gifts
Deciding what you will leave behind for your family can be an involved and sometimes stressful process. For aging parents, that stress is sometimes increased when the thought of tax comes into the equation. If you are in a position where you will be able to leave money for your loved ones, then you would probably want to ensure that they receive as much as possible. Without your savings being eroded by tax. After all, you’ve already paid tax on your income and your assets throughout life. So why should more money be lost when you pass some wealth down to the next generation?
Thankfully, there is a way that you can provide an inheritance without paying the usual taxes, and it’s completely legal, ethical, and should factor into your estate planning.
Aging Parents Can Make Yearly Gifts Instead of a Lump Sum Inheritance
Even if you have considered a family trust, you may still want to provide your children and grandchildren with a separate financial inheritance. The best way to do this, without the tax, would be to provide that inheritance through an annual gift. Gifting is covered by a special tax exclusion, just as long as the total amount doesn’t exceed $14,000 within a calendar year, as of 2019. If you are planning on giving a sizable inheritance, then you can spread out this gifting over time, allowing you to take advantage of the tax exclusion over multiple payments. Many aging parents find that this is the ideal and stress free way to provide an inheritance, and although the practice is not yet widespread, it is starting to rise in popularity.
Estate Planning with Your Spouse
If both you and your spouse split the gift payments, you will have even more flexibility with your inheritance distribution. The same $14,000 limit will apply for both of you. So you could potentially gift a total of up to $28,000 per recipient, per year. The more you look at gifting as opposed to a trust or lump sum inheritance payment, the more it makes sense. Plenty of parents living in San Diego senior housing, or even anywhere in the United States, would find that reduce taxes for family give gifts of money to be an excellent option.
Plan Ahead to Make Things Easier for Your Family
Giving an inheritance shouldn’t be a complicated process, and most importantly, your loved ones shouldn’t need to pay exorbitant tax figures on anything that you give them. Choosing to gift is a smart decision that will be easy for you, and appreciated by your family. Even if you’re planning to give a significant figure. The fact that you can break things up into smaller payments will mean that your family won’t have to miss out, and you may even have the pleasure of being a part of important purchases or investments that your family make with the money.
As you relax in your San Diego senior housing during your golden years, take comfort from the fact that you can provide an inheritance without any major tax worries. Plenty of aging parents have made the same decision, and you’ll hear nothing but positive stories about this helpful tax exclusion option. Financially savvy people use the rule to reduce taxes for family give gifts to kids to be the wisest moved they’ve made.
