Gifting assets can have big benefits in terms of income taxes and estate taxes for both the person receiving the gifts as well as the person making the gifts. In 2020, you are eligible to gift up to $15,000 per calendar year to any number of individual people without having to pay a gift tax or filing a gift tax return.
This means that married couples are eligible to give up to $30,000 to each donor recipient gift tax free. You might also hear this referred to as the annual exclusion amount. Gifts to an individual that go beyond the annual exclusion amount and are not related to medical expenses or tuition paid on the recipient’s behalf will reduce the donor’s remaining estate tax and lifetime gift tax exemption amount.
Gifts during your life, beyond the annual exclusion amount not only reduce your lifetime gift tax exemption but also negatively influence your estate tax exemption.
It is important when making gifts to consult with an experienced estate planning attorney who can help advise you about the best situation tax wise as it relates to your decision to gift and the recipient’s ability to receive it with minimal or no tax consequences.
One other issue to think about is whether this could impact your Medicaid strategy. Gifts made could impact you in terms of Medicaid penalties, so make sure you talk to a lawyer about this.
How you pass on assets has important implications for your own estate and tax planning and for your beneficiaries. If you’re stuck on next steps and how to make sure that your plan during life and beyond is aligned with your needs, our Michigan estate and elder law planning firm is here to support you.
- What Happens If I Don’t Appoint a Personal Representative in My Michigan Will? - September 20, 2021
- When Updating My Trust, Can I Write on the Original Document? - August 4, 2021
- How Long Will Michigan Probate Take? - June 17, 2021