By simply being generous throughout your lifetime and utlizing these exemptions, you can reduce your impending estate tax by thousands or even millions by gifting, while avoiding probate and other headaches along the way.
Gifting into a trust fund is a strategy that many individuals utilize for its numerous benefits.
Up to $14,000* per year can be gifted tax-free (or up to $28,000* for married couples) for as many persons or trusts. Up to 5.45* million dollars can be gifted per lifetime not including the accumulated total of your lifetime gifts without estate tax burdens.
Gifting into a trust fund can maximize the effectiveness of your gift by compounding the invested, and by holding it until distribution terms.
Why You Should Take Advantage of Gifting (A Can’t Lose Scenario)
Gifting is a strategy that is often underutilized. What is gifting, you ask? Put simply, gifting is the exchange of assets from one person to another or one person to another entity. There are a couple caveats, IRS rules however, that prevent individuals from gifting everything they have to avoid taxes.
Caveats Of Gifting Estate Assets
There are some crucial caveats and details regarding maximizing your effectiveness when gifting. Here is some help:
- Up to $14,000* per year can be gifted tax-free to multiple entities (or up to $28,000* for married couples).
- Anything over $14,000* (or $28,000* for a couple) to any one individual or entity by you is subject to Gift Tax.
- This $14,000* tax-free gift can be gifted to as many parties as you want. For example, let’s say you have 2 children and trusts established for both children. You could gift $14,000* into each trust as well as gifting $14,000* to each children tax-free, a total of $56,000* for an individual or $112,000* for a couple.
- Once a gift is made those dollars are not subject to probate or death tax any longer.
- Over the course of your lifetime, 5.45* million can be gifted without estate gift taxes, and the amount that you gift over your lifetime combined (within the $14,000* annual exclusion) does not reduce your lifetime exemptions.
- Spouses can use any unused lifetime gift tax exemptions that their spouse does not use.
- For example, if a husband dies with an estate of 4 million dollars, it will be gifted to his heirs without estate gift tax. But, there is $1.45 million* that was unused. His wife (or husband in some states), can contribute up to their limit, and the remainder of their spouses unused tax-free gift, which in this case amounts to $1.45 million.*
What this means is that individuals and couples can gift up to $28,000* per year per person or trust tax-free. As a general rule of thumb, it is better to gift your estate over the course of your lifetime to minimize taxes rather than waiting until you die. If you're having trouble understanding these limitations, you are not alone. Let's break it down.
Strategically Gift Your Estate
Gifting under the annual limit can maximize the effectiveness of your gifts when gifting into a trust fund. A disadvantage of gifting up to the annual limit is uncertainty of proper and prudent usage of your gift. Trusts prevent this and ensure that your gifts are being invested and distributed under your own terms and conditions. For example, you can gift up to $14,000* individually into as many separate Kiss Trusts per year. You can get started utilizing this tool by quickly and easily establishing a Kiss Trust for $20 with a discount code by clicking here, or the link below. Use the money you save on trust fees by using Kiss Trust to put towards your annual gift-tax exclusions.
*All figures are based on 2016 IRS data. Learn more.