Gift Taxes and Estate Planning

Gift Taxes and Estate Planning

Individuals can give tax-free gifts to an unlimited number of people each year, as long as the value of each of those gifts does not exceed a certain limit. Additionally, spouses are each personally entitled to give gifts up to the tax-free limit, even if they give gifts to the same person.

Tax-free gifts can benefit any estate large enough to be subject to estate taxes. By giving yearly gifts, up to the tax-free limit, individuals can avoid estate taxes on that portion of their estate. If these gifts are given to the same people that the estate would go to anyway, gifts can lower the tax liability estate heirs may face. In some instances, these gifts may reduce the estate below the estate-tax level, meaning gifts could potentially save an estate a great deal in taxes.

The limit on tax-free gifts has changed often over the past several years, and could change again. It is important to consult with an attorney or tax specialist when using tax-free gifts as part of an estate planning strategy.

If you have questions about this or other legal issues, call the Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620 to schedule a free consultation.