It can seem like a platitude to talk about the “joy of giving,” and words can never adequately express feelings. But you do experience a palpable sense of complete satisfaction when you give someone that you love just the right gift at just the right time. Passing along your assets to your heirs after you die is an act of giving, but for the recipients, the occasion is not a happy one.
Estate planning attorneys will espouse the tax advantages that go along with gift giving while you are still alive, and they are considerable. There is a lifetime gift tax exclusion that stands at $1 million as of this writing. This means that you can give gifts totaling as much as one million dollars throughout your life free of the gift tax. Plus, there is a $13,000 per person annual exemption that is not applied to your lifetime exclusion. So you can give as much as $13,000 every year to as many people as you want to tax-free, and if you are married your spouse can do the same. So between the two of you it would be possible to give annual gifts of $26,000 to an unlimited number of recipients tax-free.
The tax efficiency for estate planning purposes that goes along with gift giving is clear, but there is a human element involved as well. Being able to see that smile on the faces of your loved ones when you give them a gift is one of the subtle pleasures of life. It is also fun to be creative and do things for your family members that they would never do for themselves because it would seem to them to be “unnecessary.” If you have the means, gift giving is something that can provide benefits on a number of different levels, and it is something to take into consideration when you are planning your estate.