Lifetime Gifting Strategies
Another effective way of minimizing estate taxes and reducing the size of your gross estate is the utilization of lifetime gifting strategies. Some of the more common strategies include the following:
Lifetime Gifting Strategies:
- Annual gift Exclusion – Each person can gift $14,000 free of gift or estate tax in 2013. If you have three children and five grandchildren, in 2013 you could gift $14,000 to each or $112,000 in total each year. This is a fast and effective tax-free way to reduce an estate.
- Gift Splitting with Consenting Spouse – If you are married and filing jointly, you can do gift splitting with your spouse and gift $26,000 of jointly held property to each person. With three kids, and five grandkids at $28,000 each, this would reduce an estate by $224,000 each year.
- College Tuition Payments – Qualified payments in any amount made directly to an educational institution for tuition have no dollar limit and qualify for gift and estate tax avoidance.
- Spousal Gifts – An unlimited amount of gifts, interests or property can be given to your spouse free of gift or estate tax.
- Medical Expenses – Payments in any amount made directly to a provider of medical care on behalf of any individual are not subject to estate or gift tax.
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