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Why Should You Give Your Money Away?

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Everyone likes money, right? Giving money to family or friends can also be a smart tax planning move.

Why should you give your money away? For wealthier Americans, giving away cash now can help you reduce or even avoid estate taxes when you die, say Kiplinger’s recent article entitled “Give Cash Now, Cut Your Estate Tax Later.”

Any gift may be subject to the federal gift tax, but you can give up to $16,000 per person during the year without having to file a gift tax return. If you are married, your spouse can also give $16,000 to the same people, upping the annual tax-free gift up to $32,000 per person.

Whatever you give away this year, up to the $16,000-per-recipient limit, will not be counted for estate tax purposes when you die.

If the current value of your estate is above the federal estate tax exclusion amount ($12.06 million for 2022), giving away money now could drop the value below the exclusion amount. The result would be no federal estate tax when you pass away.

There could also be state estate taxes to worry about. NJ eliminated its estate tax a few years ago, but who is to say it won't be reinstated some time soon.

What happens if you are feeling extra generous and want to give more than $16,000 (or $32,000 per couple) to your fantastic 30-year-old niece this year?

You will be required to file a gift tax return (IRS Form 709), and the amount over $16,000 is potentially a taxable gift.

However, you can still avoid gift and estate taxes, if the total amount of taxable gifts so far over your lifetime is less than $12.06 million.

Therefore, if you are thinking of dropping a very large amount of cash in the hands of your niece (or whomever), it does not necessarily mean you will have to pay taxes on the gift.

For strategies about gift giving, speak with an us, experienced estate planning attorney.

To discuss why should you give your money away, book a call with the Law Firm of Benjamin D. Eckman with offices in the Wayne, Union and Hackensack.

Reference: Kiplinger (Dec. 2, 2021) “Give Cash Now, Cut Your Estate Tax Later”

Law Firm of Benjamin Eckman
Planning Today for Your Family's Tomorrow

1767 Morris Ave., Suite 314
Union, NJ 07083

By Appointment Only:

73 Mt. View Blvd., Wayne, NJ 07470
(973)709-0909

1 University Drive, Suite 609
Hackensack, NJ 07601

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Union Office

1767 Morris Ave., Suite 314
Union, NJ 07083

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Wayne Office

By Appointment Only:

73 Mt. View Blvd., Wayne, NJ 07470
(973)709-0909

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Hackensack Office

1 University Drive, Suite 609
Hackensack, NJ 07601

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