• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Who We Are
    • About Our Firm
    • Career Opportunities
    • Meet Our Team
    • News and Events
    • Seniors Rock Radio
  • Estate Planning
    • Elder Law & Medicaid Planning
    • Estate Planning Services
    • Estate and Gift Tax Figures
    • Family Farm Succession Planning
    • Family-Owned Businesses & Farms
    • IRA Planning
      • Planning With An IRA
      • IRA & Retirement Planning
    • Legacy Planning Services
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
    • Young Families
  • Elder Law
    • Coping With Alzheimer’s
    • Elder Law Resources
      • Elder Law Reports
    • Guardianship & Conservatorship
    • Hospice Care
    • Veteran’s Benefits
  • Resources
    • Definitions
    • FREE Estate Planning Worksheet
    • FREE Webinars
    • Estate Administration Legal Guide
    • Estate Planning Articles
      • Questions for Your Estate Planning Attorney Before Creating Your First Estate Plan
      • How to Create Your First Estate Plan in 2022
      • How to Choose a Guardian for Your Child
      • Address These Three Questions in Your First Estate Plan
    • Estate and Gift Tax Figures
    • Frequently Asked Questions
      • Adult Guardianship
      • Alzheimer’s Care
      • Custodial Accounts for Minors
      • Estate Planning
      • FAQs for Families Without an Estate Plan
      • Elder Law
      • IRA & Retirement Planning
      • Is Your Estate Plan Outdated?
      • Legacy Planning
      • LGBTQ Estate Planning
      • Medicare and Social Security
      • Probate
      • Probate Avoidance
      • Irrevocable Trusts
      • Trust Administration
      • Trusts
      • Veterans’ Benefits
      • Wills
    • Newsletters
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning for Niches
      • Trust Administration
    • Top Estate Planning Techniques
  • Reviews
    • Our Reviews
    • Review Us
  • Medicaid Planning
    • Medicaid Planning
    • Emergency Medicaid & Nursing Home Planning
    • Medicaid Frequently Asked Questions
    • Medicaid Resources
  • Blog
  • Contact Us

Law Office of Michael Robinson, P.C.

Estate Planning Services in Rochester, New York and the Finger Lakes Area

Connect With Us Today

(585) 374-5210
Law Pay Button
Attend a Free Webinar
Home » Estate Planning » Can You Give Gifts to Avoid Estate Taxes?

Can You Give Gifts to Avoid Estate Taxes?

July 28, 2020Estate Planning

gift taxIn many ways, the tax laws that pertain to postmortem asset transfers are favorable to inheritors. You do not have to report an inheritance on your income tax returns, and if you inherit appreciated assets, you get a step-up in basis. For capital gains purposes, you would not be responsible for appreciation that accumulated during the life of the decedent.

There is the end of the tax story for most people, but high net worth individuals have some other taxes that can have a very significant impact, and we will look at them here.

Federal Estate Tax

There is a federal estate tax in the United States that carries a hefty 40 percent maximum rate. Fortunately, there is a credit or exclusion that can be used to transfer a certain amount before the tax would kick in. In 2020, the federal estate tax exclusion is $11.58 million.

It should be noted that there is an unlimited marital estate tax deduction. If you are married to an American citizen, you can leave any amount of property to your spouse in a tax-free manner.

On the subject of spouses, the estate tax exclusion is portable. This means that a surviving spouse could use the exclusion that was allotted to their deceased spouse.

Gift Tax

The federal estate tax was enacted in 1916, and at that time, there was no gift tax. As a result, people used to give gifts to avoid the death tax, but a gift tax was put into place in 1924. This tax was repealed two years later, but it was reenacted for good in 1932.

It was unified with the estate tax during the 1970s, so the $11.58 million exclusion that we have this year is a unified exclusion. It applies to lifetime gifts along with the estate that will be transferred after you are gone.

Other Gift Tax Exemptions

In addition to the unified exclusion, there are three other gift tax exemptions that can be utilized. One of them is the $15,000 per year, per person gift tax exemption. You can give this amount to any number of people every year free of the tax.

This can be utilized to transfer a good bit of money in a tax-free manner if you take advantage of it for an extended period of time. For example, let’s say that you are married and you have three married children. You and your spouse could give a total of $30,000 to each husband and each wife.

This would be a transfer of $180,000 tax-free every year, and you could do this over an extended period of time. Direct gift giving is a possibility, but you can also use this gift tax exemption to fund certain types of trusts that provide estate tax efficiency.

There is an educational exemption that you can use to pay school tuition for students without being taxed for your trouble. It should be noted that you would have to pay the institution directly, and this exclusion does not extend to books and fees.

The other exclusion is a medical exemption. You are not taxed if you pay medical bills for others, and this includes health insurance premiums for the benefit of someone else.

New York State

We have a state-level estate tax here in New York, and the exclusion is $5.85 million. There is no gift tax, but there is a three-year claw-back provision. The value of gifts that you give in the three years preceding your death would be added to your estate for tax purposes.

Attend a Free Webinar

Our firm has traditionally conducted in-person seminars to share information about important estate planning and elder law topics with members of our community. Because of the risks that are posed by the novel coronavirus, we have transitioned, and we are now offering webinars.

You get all the same great information streamed into your own home, so it is actually a better arrangement in some ways. To see the dates and obtain registration information, visit our webinar schedule page.

Schedule a Consultation!

If you are ready to discuss your estate planning objectives with a licensed attorney, we are here to help. You can schedule a consultation if you give us a call at 585-374-5210. There is also a contact form on this website that you can use to send us a message.

 

 

  • Author
  • Recent Posts
Michael Robinson, Estate Planning Attorney
Michael Robinson, Estate Planning Attorney
Clients notice Michael Robinson’s unique approach to his estate planning practice the minute they walk through his office doors.
Michael Robinson, Estate Planning Attorney
Latest posts by Michael Robinson, Estate Planning Attorney (see all)
  • How Estate Planning for a Family May Trap the Unwary Practitioner - August 31, 2022
  • State Income Taxation of Social Security Benefits - August 24, 2022
  • Understanding Tax Apportionment Clauses - August 17, 2022

Other Articles You May Find Useful

What Makes A Will Or Trust Invalid 150x150
What Makes a Will or Trust Invalid
How Do I Trust Thee…Part III 150x150
How Do I Trust Thee…Part II
Estate Planning – Something You Shouldnt Do Yourself 150x150
Estate Planning – Something You Shouldn’t Do Yourself
inheritance
Do You Have to Accept an Inheritance?
Application Of The Updated Life Expectancy Tables 150x150
Application of the Updated Life Expectancy Tables
Start 2022 The Right Way 150x150
Start 2022 the Right Way

Primary Sidebar

Law Office of Michael Robinson, P.C.

Blog Subscription

  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • Twitter
  • Linkdin
  • Youtube

TESTIMONIALS

News & Events

Seniors Rock Radio Show Recording 5-1-21

https://drive.google.com/file/d/1U7UkQbEGy-xY7XFAXvX9Qz7pKSVDVV3D/view?usp=drive_web   Author Recent Posts Michael Robinson, Estate Planning AttorneyClients notice Michael Robinson’s unique approach to his estate planning practice the minute they walk through his office doors. Latest posts by Michael Robinson, Estate Planning Attorney (see all) How Estate Planning for a Family May Trap the Unwary Practitioner -... Read more →

Pittsford Office

1163 Pittsford-Victor Road, Suite 120 (Powder Mill Office Park)
Pittsford, NY 14534-3817
Phone: (585) 374-5210
Fax: (585) 485-0394

See Larger Map Get Directions

Map

mrobinson_sidbr_map

Footer

  • Advantages of Working With Our Firm
  • About The American Academy
  • Disclaimer
  • Privacy Policy
  • Sitemap
  • Contact Us

Connect with Us

  • Facebook
  • Twitter
  • Linkdin
  • Youtube
robinson law logo

The Law Office of Michael Robinson, P.C.

Attorney Advertisement


© 2023 American Academy of Estate Planning Attorneys, Inc.