When you are going through life accumulating assets and you become aware of the fact that you will have a considerable store of financial resources remaining after you pass away you have some decisions to make.
This is what estate planning is all about, and as a layperson you probably don’t have a lot of detailed knowledge about the tax code as it applies to your estate and gift giving while you are still alive.
Perhaps unfortunately, the more successful you are the more the tax man wants to get involved in your affairs. It is important to understand this every step of the way and make informed decisions with the implications of the tax code in mind.
Many people are not aware of the fact that there is a gift tax in place and it is unified with the estate tax. So if you give gifts while you’re still alive in an effort to share your wealth with your loved ones they are subject to taxation.
There is a lifetime gift tax exemption, but it is unified with the estate tax exclusion. So the amount of your available estate tax exclusion will be reduced by the amount of any gifts that you give throughout your life using the unified exclusion.
In spite of the above, there are some gift tax exemptions that exist in addition to the unified lifetime exclusion. One of these allows you to pay the school tuition of students as a gift free of the gift tax. You can also pay other people’s medical expenses as a gift, and this includes the purchase of health care insurance.
In addition, each year you can give as much as $13,000 to any number of people as a tax-free gift without impacting your lifetime exclusion.
Measured gift giving utilizing these exemptions can be a part of an intelligently conceived estate plan. To learn more about estate planning in light of the intricacies of the tax code, don’t hesitate to pick up the phone to arrange for a consultation with a licensed and experienced Suffolk County NY estate planning lawyer.
The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.