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How Lifetime Giving Can Help Reduce Estate Taxes

How Lifetime Giving Can Help Reduce Estate Taxes

Amherst, NH Family Plans Ahead for Their Children’s Inheritance

If you have a sizable estate, it can be beneficial to start giving it to your loved ones now, rather than waiting until you pass away. You can give any number of people up to $17,000 each year without incurring the gift tax. For couples this amount is $34,000. This can allow families to begin accepting their inheritance while their loved ones are still alive, receiving money without having to pay estate taxes. Another benefit of this type of lifetime giving is that you can have the joy of sharing your wealth with family now.

A couple in Amherst wanted to begin giving their children portions of their inheritance so that they could enjoy these gifts. Wanting to find the most tax-advantageous way to do so, they sought the advice of the team at Merrimack Tax Associates.

Lifetime Giving Allows Tax Savings for Those Exceeding the Estate Exemption

For very large estates that will exceed the estate exemption, set at $12.92 million for 2023, it is advisable to take some steps to reduce taxes that your family will have to pay after your passing. Any amount of inheritance more than this $12.92 million will be subject to estate tax. For those with sizable assets, it can be beneficial to begin giving to family members each year, restricting to the $17,000 per person annually that will allow them to avoid having to pay a gift tax. By lifetime giving in this manner, you can be sure that your heirs will not have to pay additional taxes on their inheritance.

Other Ways to Give Tax-Free

Beyond the $17,000 gift limit, you can also make unlimited payments directly to medical providers or educational institutions. This is a great way to share your wealth to help family members that may be incurring medical debt or those that are pursuing their education. This does not affect your ability to gift the individual $17,000 annually tax-free and is a good way to distribute additional wealth to family members.

The Amherst couple was pleased to learn about the benefits of lifetime giving and have already made plans to begin distributing their wealth to family members.

estate tax, gift tax, inheritance, tax savings