An effective estate plan will allow your family to continue to enjoy the maximum amount of assets you’ve taken a lifetime to accumulate, and minimize the amount of your assets which will go to the government at your death. It is imperative that you work with estate planning counsel to craft your estate plan to allow for utilization of every estate planning opportunity available to you and your family.
For the tax year 2023, the annual gift tax exclusion is $17,000 per recipient, making it possible to make annual tax-free gifts up to $17,000 annually, to as many recipients as you want; without having to worry about paying the federal gift tax. You can also split gifts with your spouse, effectively doubling your annual exclusion to $34,000 per recipient. Above that, transfers count against your lifetime gift and estate tax exemption.
Another way to be excluded from the gift tax is through the lifetime gift tax exemption, which is the total amount you can give away without owing any gift tax. For the tax year 2023, the lifetime gift tax exemption is $12.92 million per person. That means you can give up to $12.92 million without owing any gift tax, or up to $25.84 million for married couples.
If you managed to use up all of your exclusions, you might have to pay the gift tax, which imposes taxation for gifts above the annual gift tax limits. Tax rates vary from 18% to 40%, making planning essential.
Life insurance can be one of the most effective and efficient tools available to you in the estate planning process, and it makes sense to include the services of a qualified life insurance professional to assist in the design of your plan. Your should engage a credentialed life insurance professional with the following degrees if possible: Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) and Certified Financial Planner (CFP).