Making Cash Gifts to Avoid Estate Taxes
Giving your wealth away while you are still alive isn’t just a way for you to get some satisfaction out of seeing how your gift affects your loved ones—it’s also a savvy estate planning tactic that can help you reduce or eliminate your estate tax responsibility.
Here’s an overview of what you should know about making cash gifts to avoid estate taxes.
What to know
There is no state gift tax in Florida, but the federal government enforces one. For the 2021 tax year, every American is able to give up to $15,000 per year to any individual person without being subject to gift taxes. This exemption amount doubles to $30,000 per year for married couples.
This means if you are married and have four children, you may transfer up to $120,000 of your wealth to your four children, each year (subject to the federal gift exclusion amount for that year) without having to worry about gift tax penalties. If you are married with grandchildren, you can spread the wealth even more by adding on another $30,000 for each grandchild.
It’s important to remember, however, that any individual gift that exceeds $15,000 per individual or $30,000 for married couples, is subject to federal gift taxes.
Keep in mind that gift tax and estate tax rates can vary from year to year, and with a new administration taking over in the White House, there’s always a possibility that new legislation could change some of the tax rates.
An estate planning attorney can provide you with up-to-date information and tips about estate taxes. For more information, contact a trusted Tampa lawyer at BaumannKangas Estate Law.