Given the uncertainty surrounding next year's taxes, here is a reassuring thought: One of Uncle Sam's most useful tax benefits isn't expiring, shrinking or otherwise under threat after 2012. Experts call it the "annual gift exclusion."
Have you in Cincinnati been following the news about the uncertainty of estate taxes? The news appears pretty gloomy, yes? Cheer up! That old planning stalwart, the annual gift exclusion, continues to be a safe bet for wealth transfer planners.
The Wall Street Journal recently took up the praises of the annual gift exclusion in an article aptly titled “The Gift That Keeps Giving.” Indeed, gifts will keep giving, and it’s important to know how they work and how to give them appropriately.
Currently you can give up to your annual exclusion to as many parties as you wish each calendar year, without any corresponding reduction in your lifetime gift/estate tax exemption. The current annual gift exemption is set to $13,000 and will expand with inflation.
Don’t forget, if you are married, “gift splitting” is a way to give $26,000 to your loved ones. This is especially important in blended families when the entire $26,000 will be coming from separate resources of one spouse to his or her own children. Note: there is some simple IRS paperwork required to make this work.
Depending on the number of family members (or other loved ones) you may have and the extent of your resources, maximizing the annual gift exclusion truly is a simple but significant technique for wealth transfers.
If you have any questions about any of the information contained in this blog, see my estate planning website or contact Cincinnati attorney David H. Lefton at 513-399-PLAN (7526) or by email at firstname.lastname@example.org.
Reference: The Wall Street Journal (August 17, 2012) “The Gift That Keeps Giving”