thecomplexestateAdvanced planning has many plusses, not to mention tax savings. If a person can afford to do complex planning then more than likely they can afford to gift.
Many of us, to the point ad nauseam, have read and spoke about the ability to gift during this opportune time. Charity is usually part of the discussion as well as using one’s annual gift tax exclusion.
Many of our Goal Achiever plans involve the use of the lifetime exemption, annual gift tax exclusion as well as charitable planning techniques. Historically annual gifting was intended for example to fund college education, down payment on a home, start a child’s or grandchild’s new business and moving highly appreciated assets out of one’s estate.
I believe “gifting” has a new intention. Survival
Today, you could be seeing it thrown as a safety net. There have never been so many college grads with so much debt, without jobs, and living at home. Never have you seen so many breadwinners out of work long-term and their family’s suffering.
The annual exclusion is now the new lifeline. Consider someone who can actually afford to make five annual gifts. That is $65,000 tax-free which in today’s society can actually help a family of five get through a rough period of long-term unemployment. It won’t make them rich but it will put food on the table, pay the mortgage (or least some of it) and keep the heat on.
Families can create a letter of understanding stating that annual gifts made are intended to help during this difficult period, are irrevocable and should not become relied on when things turn the corner.
It can also help a young college grad begin to wipe out his/her debt so they can focus on getting a “real job” in their respective field. Sadly, it is a waste to get a four-year degree and only become a barista at a coffee shop. Annual gifting can be the new “post” college funding.
What can you do to get your clients to think differently about annual gifting when it means survival?
Kim Hamilton
Related articles
- Tax Savvy Children Gifts (lawprofessors.typepad.com)
Filed under: gifting Tagged: | Advanced Estate Planning, Cah, charitable planning, Gift tax, Inheritance tax
