Sharing The Wealth

Tis the Season of Giving! During this time, we get a lot of questions about gifting money so we'd like to share some great tips from Edward Jones. The full Edward Jones article can be found at:

"Whether it's helping a child or grandchild buy their first home, taking your family on a vacation or supporting a loved one in a meaningful endeavor, gifting money to friends and family can be profoundly fulfilling. When done correctly, gifting can also provide estate, income and/or capital gains tax benefits. It may benefit your loved ones, and your own financial plan, to give while you're still living. Here's what you need to know about the gift tax and estate tax exemptions and how they can impact your giving strategy.

Annual Gift Tax Exclusion

The annual gift-tax exclusion is the amount of money you can give to an individual in a single year without being subject to potential gift taxes. In 2023, that amount is $17,000. The exclusion amount is per donor, per recipient, per year. For example, parents can each give this amount to each child every year. Any gift over the exclusion amount will count against your lifetime gift and estate tax exemption amounts. It's not until you've exhausted the lifetime amount that you, the gift giver, would owe gift taxes.

Lifetime Gift and Estate Tax Exemption Amount

The lifetime gifting and estate tax exclusion amount is separate from your annual gift tax exclusion amount. The limit in 2023 is $12.92 million per person. Amounts given over your annual gift-tax exclusion limit reduce your lifetime limit. Using the lifetime exclusion amount by gifting during your life reduces the amount you're able to transfer estate tax free to your heirs when you pass away. Note: Giving amounts over the lifetime gifting and estate tax exclusion either during life or death will incur up to a 40% tax.

The lifetime gifting and estate tax exemption amount will be reduced in 2025. Because of this, individuals who expect to have estates greater than $5.49 million ($10.98 million per couple), adjusted for inflation since 2017, may consider gifting up to the current limit of $12.92 million ($25.84 million per couple) prior to the change to lock in the tax-free transfer of assets at this higher amount."

For more information or further clarification of the above information, please read the full article published by Edward Jones. As always, it is a smart move to ensure you speak to a trusted financial advisor before making any large financial decisions.


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