Many estate planning attorneys will tell you that one of the most underutilized estate planning tools available to a lot of people is the giving away of lifetime gifts. Like inheritances, giving lifetime gifts is subject to key tax provisions that, once you understand, you can devise a plan to take advantage of. If you haven’t already talked to your attorney about developing a gift strategy you should do so soon, but here are three tips you’ll want to keep in mind.
Tip 1: Understand your limits.
A lifetime gift strategy needs to be based on current gift and estate tax laws. Your attorney will tell you what the current laws are, and once you know the limits of what you can, or should, give you can make an appropriate plan.
Tip 2: Identify recipients.
The gift tax laws allow you to give a maximum amount of lifetime gifts to individuals. However, you shouldn’t feel compelled to give the maximum, especially if there are a lot of people you want to give gifts to. It’s best to come up with a list of people who you want to give lifetime gifts to and then determine the appropriate amount to give to each.
Tip 3: Maximize gift giving.
The lifetime gift rules apply to individuals, meaning that both you and your spouse can give gifts and still meet the exemption limit. If you have a lot of assets you will want to ensure that your gift giving plan takes a consideration both the amount you can give, as well as the amount your spouse can give.
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