Part of the joy of building an estate worth protecting is having the resources to give generously to those you love. For many grandparents, few things compare to being able to give your children, grandchildren and other family members gifts that they treasure or providing them with experiences that they might otherwise miss.
However, many grandparents may risk troublesome tax implications if they give too generously to any particular person without first consulting an estate planning professional. The federal government offers everyone fairly broad personal exemptions to ease the complication of exchanging gifts, but there are limits.
Don’t wait to consult with an experienced estate planning attorney to determine how you can make the most of your resources to spread joy this upcoming holiday season. With some professional guidance, you can ensure that you address any gift giving concerns before they have an opportunity to cause greater problems.
What is exempt from gift tax?
Depending on the scale of your gift-giving throughout the year, you may have nothing to worry about when it comes to gift tax. Under the individual gift tax exemption, each person can give each other a certain amount of money or other items of value each year. As long as you do not exceed these individual thresholds, you are not subject to gift tax.
As of November, 2017, the individual gift exemption is $14,000 per person per year. This means that you may give another person $14,000 in 2017 without triggering gift tax. The exact figures change from time to time, so it is important to stay up-to-date on any changes that may affect your giving.
Remember that this exemption is cumulative for the year. This means that if you already gave a grandchild $5,000 at some earlier point in the year, then you may only give him or her $9,000 more until 2018 if you hope to avoid gift tax.
Usually, two spouses may both receive individual gifts, even if they will both use it for joint purposes. This may prove useful if you have a particularly large gift you hope to give a family. Spouses may usually give gifts to each other free of taxation, but it is important to understand the potential tax implications before any large transfer.
Don’t wait to consult with an experienced estate planning attorney to help you prepare for the holiday season. With professional guidance, you can help prevent unexpected consequences of great generosity while keeping your rights and priorities protected.