Four Things to Consider Before Making a Lifetime Gift

Not all estate planning is something that comes into play after your death. In some cases, making gifts to your family – or whoever your eventual heirs will be – might be an advantageous thing to consider. Transferring assets during your life can also be an excellent strategy to minimize overall estate taxes, and to ensure that more of your hard-earned property goes to your family and not the government. Here are four things to consider before making such a gift:

1. Know how much you can give.

The current federal gift tax annual exclusion allows every person to give up to $14,000 each year to an unlimited number of donees, entirely free of tax. This exclusion is available for outright gifts of property, cash, and other assets, and for gifts made to certain types of trusts.

2. Double the amount.

This annual exclusion may be doubled for a husband and wife who file a married joint tax return. This means that Grandma and Grandpa can make combined annual gifts of up to $28,000 to each child, grandchild, church, charity, etc.

3. Tax savings.

The federal estate tax rate is 40 percent, and applies to taxable estates that exceed $5,450,000. Therefore, depending on your individual family situation, each lifetime gift of $14,000 could save your family $5,600 in taxes. Although the $5.45M federal estate tax exemption might not apply to everyone, the state exemptions are much more likely to because they set the threshold significantly lower. For example, the exemption in Connecticut is $2,000,000 and the exemption in Massachusetts is $1,000,000. Accordingly, a gifting program may yield significant savings at the state level also.

4. Some “gifts” are not taxable.

It pays to think outside the box. If structured properly, paying the medical expenses, health insurance premiums, or the school tuition of another person is not a taxable gift. Any such payments must be made directly to the healthcare provider or school. These gifts may significantly increase the amount that a donor can transfer free of gift or estate tax because Grandma and Grandpa could, for example, pay a grandchild’s full school tuition and health insurance costs, and give another $28,000, without incurring any gift tax liability.

For assistance with any legal matters related to your business or estate planning, contact Fournier Legal Services at or 860.670.3535 for a free consultation and planning session.

Joe Fournier

Joe Fournier

Joseph E. Fournier is an Attorney and a CPA who has more than twenty years experience advising and leading companies and individuals in a variety of capacities.

Joe received his law degree from the University of North Carolina–Chapel Hill School of Law and his Accounting degree from the University of Rhode Island. He is admitted to practice law in Connecticut, Massachusetts, and Rhode Island, and he is a CPA. He is an Adjunct Professor and lecturer at the University level and has been a frequent speaker on business planning and legal matters.
Joe Fournier
By |2017-10-19T13:24:00+00:00October 19th, 2017|Estate Planning|Comments Off on Four Things to Consider Before Making a Lifetime Gift