As the old saying goes, nothing is certain except death and taxes.
Since we so often talk about death here on our trusts and estates blog, we thought that today we would spice things up a bit and talk about taxes—estate taxes as a matter of fact.
The Joy of Giving Gifts While Reducing Estate Taxes.
Everyone loves to receive a gift. Sometimes, the person giving the gift is just as happy as the person who receives it.
When it comes to estate planning, gift-giving can benefit you (your estate) as much as it does the person receiving your gift.
Well, if you have a sizeable estate, one of the things you will need to think about is how much your estate will have to pay in taxes (“estate tax”) when you die. Because estate taxes for large estates can be pretty hefty, you may want to consider ways to reduce your estate taxes now while you are still alive.
One of the best ways to do this is by making gifts.
There are many good reasons for making a gift, including how good it makes you feel, but one of the best reasons for making a gift is because it can actually cost you less to make a gift while you are alive, than it does to wait until you die and have your estate pay estate taxes on the gift.
How can that be?
It is like this: when you make a gift during your lifetime, you pay a “gift tax.” When you make a gift through your estate plan, after your death your estate will pay an “estate tax” on that gift. While the fact is that you will pay taxes either way, making a gift during your lifetime has the added benefit of taking that item (i.e., the gift of money, stock, or other asset) out of your overall taxable estate. Which means that you not only give someone a gift, but you reduce your estate taxes overall.
If you are in a position to need to reduce your estate taxes, gift-giving is a good way to do it. You can make tax-free gifts of up to $13,000.00 per person each year to as many people as you want (and up to $26,000 per person if you and your spouse give together).
Nor do you have to give cash as a gift. You can gift appreciating assets and doing so takes any future appreciation of that asset(s) out of your estate.
There is a lot more to know about gift-giving and how it can help you further your estate plan by reducing your estate taxes. To find out more about estate planning options that will work for you, consult with capable and experienced trusts and estates counsel.
Talk To One of Our Trusts and Estates Attorneys.
To learn more about how gift-giving can benefit your estate, or to get started making your estate plan, call us at 928-282-1483. We are experienced trusts and estates attorneys. We offer free consultations. Our offices are located in beautiful Sedona, Arizona but we serve all of Arizona. We can help you provide and plan for your loved ones. Call 928-282-1483 today or contact us here.