Preserve Your Legacy

Estate Planning | Elder Law | Special Needs Planning


Inheritance Plan in Action

When you give gifts to the people who you would be leaving an inheritance to after you pass away you remove the value of these gifts from the overall value of your estate, and that is going to provide you with estate tax efficiency. Of course there is the gift tax that stands in the way of simply giving away all of your estate before you die to avoid the estate tax. However, there are gift tax exemptions that can be taken advantage of and you can use them quite creatively and gain some genuine enjoyment as you put a portion of your inheritance plan into action.

There is a $1 million lifetime gift tax exclusion so you can give gifts of up to one million dollars over the course of your lifetime without incurring any gift tax liability. But there is also an annual $13,000 per person exemption. So for example, you could give an heir $13,000 each year for 20 years if you planned on leaving them $260,000. You could also use this annual gift to purchase life insurance and make your heir the beneficiary. In this manner you are transferring these assets to your heirs tax-free and reducing the overall value of your estate in the process.

The way to actively participate in this plan beyond just handing a loved one a check is to do some creative giving. You can use your annual exemption to give any type if gift; it could be a motorcycle, a musical instrument, a piece of jewelry, a vintage Billy Martin jersey, or a work of fine art. This is a really fun way to take advantage of your gift tax exemption and gain estate tax efficiency while you give your family members thoughtful gifts that will have special meaning to them for the rest of their lives.