Tax Planning

Inheritance tax planning: giving to heirs

With the holiday season approaching and the tax year drawing to a close, it’s a good time to start thinking about giving your loved ones and heirs tax-deductible gifts. There are many ways to do this, suitable for every budget, tax purpose, and family need.

Annual bargaining gifts

Currently, you can give gifts of $ 15,000 each to an unlimited number of beneficiaries, such as children and grandchildren, per calendar year. If you have a spouse, you can double that amount each calendar year to $ 30,000 per beneficiary. This gift is completely tax-free and does not count towards your lifelong tax-free allowance. You can give gifts with any asset including cash, stocks, bonds, even partial ownership of real estate. Gifts of any significant asset will be removed from your taxable assets at their current value and future appreciation will also be removed. Keep in mind that if your estate exceeds the estate tax exemption and you haven’t given such annual bargaining gifts, that same wealth would be reduced by estate tax at the time of your death on your death, which, in fact, could shrink that wealth by up to 50% .

If you have a taxable estate or are close to or above the tax exemption, it can make sense to give gifts in excess of the annual tax exemption. Periodically review the current inheritance tax rate with your Cona Elder Law attorney to determine whether it is cost-effective to give gifts above the annual lockout amount.

College savings plans and medical expenses

There are other ways to support your heirs financially without incurring any gift or inheritance tax consequences, e.g. B. by investing in education savings plans (529 plans). You can also pay tuition directly tax-free as long as you make the payment directly to the educational institution, including colleges and universities, and elementary, middle, and high schools. You can also pay tax-free medical and health insurance costs on behalf of your heirs, provided you pay the costs directly to the service provider.

Note that these asset transfers for Medicaid Authorization Purposes are NOT free, unique, and subject to a penalty if made during a Review Period. One size doesn’t fit all, so be sure to meet with your Cona Elder Law attorney to determine the best course of action for you and your family.

Jennifer B. Cona, Esq. is the founder and managing partner of Cona Elder Law, an award-winning law firm specializing in senior law, estate planning, estate administration and litigation, and health law. The firm was ranked the # 1 Elderly Law Firm by Long Island Business News for eight consecutive years. More information is available at

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