Those with more assets than they need for retirement may start worrying about the financial implications of their property. When someone with substantial personal property dies, their executor and beneficiaries may need to pay estate or inheritance taxes.
Having a lot of assets when you die could also make estate administration more difficult for your loved ones. There’s also something to be said about your biggest gifts to your loved ones occurring after they can no longer thank you.
Gifts can help you reduce your tax gifts
Gifting assets or money to loved ones as you get older to reduce the value of your estate is a popular strategy. People often do so by transferring large sums of money or ownership of valuable assets, like jewelry and vehicles.
You can make your estate more manageable with each passing year while also getting to watch the people that you love enjoy their inheritance. Strategic gifting can be beneficial, but it’s important that you understand that there are tax implications for gifts, even those given to your children. How much can you gift someone without making them responsible for taxes?
The IRS routinely updates its policy on gifts
Everything from the average household income to inflation can impact how much people want to give to loved ones, as well as the timing of those gifts. The IRS does sometimes increase its limitation on family gifting to reflect economic changes.
Currently, you can give someone up to $15,000 worth of financial assets or personal property without any tax consequences. After the amount exceeds $15,000, the recipient will have to claim those gifts on their tax return and pay the appropriate taxes.
Understanding the maximum amount that you can give to your family members can help you strategize for tax minimization on behalf of your heirs.