Did you know that giving gifts during your lifetime could be a viable way to reach some of your estate planning goals? Gifting is an estate planning tool that some Kansas residents can employ as a means to reduce the federal estate tax burden on their estate. Before you incorporate gifting into your estate plan, it is crucial that you understand that gifts you give during your lifetime are taxed similarly to estates and inheritances. You must understand what the gift tax is and how it works because that knowledge will help you decide whether gifting is something you would like to incorporate into your estate plan. The first thing Kansas residents need to know about gift tax is that Kansas does not have a state gift tax. However, there is a Federal gift tax that you’ll want to understand before you decide whether to include gifting in your estate planning strategy.
Gifting is an estate planning strategy because giving money or assets away during your lifetime reduces the value of your estate. Gifts are just that, a complete transfer of money or property to another person, holding no rights to use or other legal “strings” for yourself. Gifts to individuals are treated differently than gifts to charities, which are excluded from the federal gift tax. A certain amount of non-charitable giving is exempt from federal taxation. You may give tax-exempt gifts of up to $14,000 worth of cash or property annually to each of any number of people you choose. Married couples can make contributions of up to twenty-eight thousand dollars annually to each of any number of individuals they choose.
Gifting as an estate planning strategy is not as simple as deciding whom to give gifts to and then giving them. Individuals and couples that gift must file gift tax returns with the IRS each year. Additionally, there is both an annual and a lifetime component to the federal gift tax exemption. Individuals and couples who gift must consider that the total amount of gifts that they give during their lifetime reduces the estate tax exemption that will apply to their estate upon their passing. The reduction is equal to the value of the gifts given, so it is vital that individuals and couples who are considering gifting consider the total picture of how the estate tax exemption and the gift tax exemption would work out if they followed a specific plan for giving during their lifetime.
If you would like to consider whether gifting would help you accomplish your estate planning goals, Wichita attorney J. Joseph Weber can help you understand whether and how gifting could work with your current estate planning strategy. Gifting is just one of a diverse array of estate planning tools you can use to design an estate plan that enables you to experience security during your lifetime as well as peace of mind that your estate will accomplish the things you want it to achieve upon the event of our passing. Please call our office to schedule your no-obligation consultation, at 316-265-7802, or contact us through our website.