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Many families have plans to give their children and grandchildren financial gifts when they die, but it might make sense to gift earlier. Making financial gifts during your lifetime can significantly impact their lives, sometimes when they need it most. It also provides you with the benefit of seeing your loved ones enjoy your gifts.<\/p>\n
Perhaps your plan is more financially focused. If you believe your estate might owe estate tax, gifting assets to your heirs throughout your life, rather than waiting until death, can be a powerful way to reduce the amount of taxes ultimately paid by your estate.<\/p>\n
In 2021, an individual can transfer a total of $11.7 million at death or during their lifetime free from federal gift and estate taxes. Together, a married couple can transfer twice that amount\u2014$23.4 million\u2014free of tax. The current tax law allows you to give certain gifts that don’t count against your gift and estate tax exemption amount. They also don’t require filing a gift tax return, so maximizing these “free” gifts is typically the first place to start with lifetime gifting.<\/p>\n