One of the many changes incorporated into the new tax reform bill is an increase in the amount of money a person can give to anyone else and have it excluded from their lifetime estate tax exemption. Starting in 2018 the gift allowance is $15,000, up from $14,000 in 2017.
Additionally, the lifetime exemption doubled in 2018 to $11 million per person ($22 million per couple), up from $5.5 million ($11 million per couple) in 2017, making death taxes virtually non-existent for most Americans. However, this increase is temporary and will end after 2025, unless extended by Congress, whereupon the lifetime exemptions will revert to the 2017 levels (adjusted for inflation).
Parents with the ability (and desire) to give money to their children can now give each child $30,000 per year ($15,000 from each parent). Affluent, benevolent grandparents can do likewise. For those few families that may be facing an estate tax upon their death, gifting is a popular way to move assets out of an otherwise taxable estate. Multiply $30,000 annually for each child and grandchild (or favorite niece and nephew) over the donor’s expected lifetime and the numbers can be significant.
It is important to remember these changes when reviewing your financial plan. Since Wealthview Capital does not provide tax or legal advice, you should also consult your personal tax and legal advisors when discussing the merits of any gifting strategy.