Tax Considerations for Gifting PC1411-Digital

TAX MANAGEMENT

TAX CONSIDERATIONS

These payments are not treated as additional gifts to the family, and will avoid estate tax in the donor’s estate. 4. GIFTING YOUR LIFETIME EXEMPTION NOW The combined gift and estate tax exemption is $5,450,000. You may transfer these amounts to another beneficiary without incurring estate or gift taxes. This doesn’t apply to your spouse because you may transfer unlimited amounts to your spouse. Gifts must be irrevocable but can be made of a future interest, not just a present interest, allowing you to provide access to the funds in a trust with certain conditions (e.g., the beneficiary reaches a certain age). The illustration below demonstrates the power of early gifting.*

GIFT

NO GIFT

Initial Amount

$1,000,000

$1,000,000

Account Value after 15 Years Growth $2,000,000

$2,000,000

- Estate Tax

$0

$800,000 (at 40%)

Beneficiary Amount

$2,000,000

$1,200,000

*Assumes 15% capital gains rate continued, estate tax at 40%.

5. TAXABLE GIFTS

Taxable gifts include gifts in excess of your annual exclusion

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