There are many estate planning strategies to consider, but here’s one that many people overlook: the opportunity to give away their money tax-free.
This may not sound like a good idea, but it’s one of the best ways to ensure that your assets end up with the right person or people. Even better, you can see the joy on the person’s face when you gift them the cash, something that is impossible to do after you have passed on.
Here are two things you need to know about giving away money tax-free:
— The annual gift tax exclusion is currently set at $14,000 per year, per person. This applies to both cash and gifted property. You can give this amount to as many people as you want, every year. As long as you stay under the limit, the federal government can’t tax any of it.
— The lifetime estate tax exclusion for 2017 is set at $5.49 million.
In addition to the above, you should also learn more about the federal and state estate tax rates.
There is no easy way of knowing what type of estate planning strategy is right for you. You need to consider all your options – which includes giving away money tax-free – to ensure that you make the right decisions.
If you decide that giving away money tax-free is a good idea, such as to help your loved ones, you should implement a plan for doing so in the appropriate manner. By staying within the legal limits of the law, you won’t have anything to worry about as you do this.
Source: The Motley Fool, “How Much Money Can You Gift Tax-Free?,” Matthew Frankel, June 25, 2017