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When people die, they want to leave their home, money, and valuables to loved ones or a favorite charity, not the government. Although it is impossible to completely avoid estate and inheritance taxes, savvy people can minimize the burden on inheritors. One way is to give away part of their estate as gifts. This reduces the value of their holdings, thereby reducing estate taxes.
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Reducing Estate Taxes Through Gifting
Reducing Estate Taxes Through Gifting
When people die, they want to leave their home, money, and valuables to loved ones or a favorite charity, not the government. Although it is impossible to completely avoid estate and inheritance taxes, savvy people can minimize the burden on inheritors. One way is to give away part of their estate as gifts. This reduces the value of their holdings, thereby reducing estate taxes.
Reducing Estate Taxes Through Gifting
Of course, the government assesses gift taxes on property given to someone other than a spouse (assuming the spouse is a U.S. citizen). The good news is that each person has a lifetime exemption from the gift tax ($1 million in 2013). In other words, a recipient of real estate, cash, or stocks will only have to pay a gift tax if the giver’s lifetime gift total exceeds that amount. Over that limit, annual gifts made to a spouse who is not a U.S. citizen are exempt up to the first $143,000 in 2013. Gifts to anyone else are exempt up to $14,000 in 2013. Current gift tax rates range from 18 to 35 percent.
About the author
An accountant with financial planning experience, Adam Greene of Melville, N.Y., is a partner at Greene & Company LLC.
