Gifting Tax-Free

The old proverb “it is better to give than to receive” has much truth to it.  Giving money to family and friends or your favorite charity can be immensely rewarding, both during your lifetime and upon your death.  When you decide to give, there are ways in which to gift your funds so that you do not have to pay taxes on this amount.  Our California estate planning attorneys at OC Wills & Trust Attorneys offer an overview on estate and gift tax limits and how you can protect your assets. 

Any individual in California or across the country can give up to $14,000 a year to anyone or any number of people without having to pay a gift tax.  Married couples in 2017 can give up to $28,000 if they elect to split their gifts.  Gifts of this amount or under do not have to be reported, though you should keep records of the gift.

Gifting becomes more complex if you give over $14,000 a year.  For large gift givers, a lifetime exclusion exists.  You can gift up to $5.49 million per individual during your lifetime and not have to pay taxes on this amount.  However, you will be required to report gifts that exceed the $14,000 annual limit, as gifts in excess of this figure count towards your lifetime limit. 

Currently, the federal estate tax still stands and wealthy individuals may face a 40 percent tax on their assets passed to heirs that exceed federal limits.  President Trump has discussed eliminating the federal estate tax entirely, but thus far no definitive plans exist to abolish the hefty tax.  Individuals with significant assets should take steps to shield their assets from the federal estate tax. 

Proper estate planning can ensure you avoid the estate tax.  Strategies could include the creation of certain trusts and using gifting laws to pass down benefits during your lifetime.  Consult with an estate planning attorney in your area to get started with developing your estate plan today.  With your attorney’s assistance, you can help to see that your assets are passed down entirely to the people that matter.  

Brian Chew, the managing partner of OC Wills & Trust Attorneys, has extensive experience in the areas of estate planning, asset protection planning, business succession planning, long-term care planning, and veterans’ benefits. By devoting his practice to estate planning matters, he has founded a firm that strives to provide exceptional service to their clients by working closely with individuals and their families to create comprehensive and customized estate plans. For the past twenty five years, Brian has served thousands of clients in the matters of estate planning, wills and trusts. If you have any questions about this article, you can reach Brian Chew here.