Year-end can be a critical time for investors who want to take advantage of certain gifting and estate planning strategies.

As Chris Hennessey notes, the annual gift tax exclusion allows an individual donor to give up to $14,000 without triggering a gift tax. But if it is not used by year-end, the opportunity is lost.

Other year-end considerations for gifting and estate plans include:

  • A special provision of 529 college savings plans allows a donor to give five years’ worth of gifts at one time.
  • Gifting an income-producing asset, such as rental real estate, can shift the income tax liability to other family members.
  • Only a small number of estates will exceed the federal estate tax exemption of $5.45 million. But individuals must still monitor changes on the state level, since they may be subject to state inheritance or death taxes.
  • When giving to charity, investors should explore the tax advantages of making a direct donation, or giving from a trust, and the impact of giving an appreciated asset or mutual fund.

While the estate plan portability rule makes it easier for a surviving spouse to utilize their spouse’s estate exemption, there may be benefits to establishing a trust, especially in cases of second marriages. It is important to consult a professional advisor and tax expert on these advanced strategies. Lastly, an estate planning discussion also offers an opportunity to review documents and beneficiaries.


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