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Strategic Gifting in Estate Planning

Posted by Jason Johnson | Jul 10, 2024

Incorporating strategic gifting into your estate planning can be a powerful way to manage your assets, provide for your heirs, and potentially reduce your taxable estate. Understanding how to use gifting effectively can maximize your and your beneficiaries' benefits.

Annual exclusion gifting: Each year, the IRS allows you to give a certain amount of money to as many people as you like without incurring any gift tax. This is known as the annual exclusion, and it's a valuable tool for gradually transferring wealth to your heirs while reducing the size of your taxable estate.

Lifetime exemption: There's a lifetime gift tax exemption besides the annual exclusion. You can give away this amount over your lifetime before incurring gift tax. Strategic use of this exemption can significantly impact your estate planning.

Educational and medical exclusions: Payments made directly to an academic institution for tuition or to a medical institution for healthcare expenses are exempt from gift tax. This allows you to support your loved ones' education or medical needs without impacting your gift tax exemptions.

Charitable giving: Gifts to qualified charitable organizations can reduce your taxable estate and fulfill philanthropic goals. Additionally, these donations can provide significant tax deductions during your lifetime.

Strategic gifting requires careful planning and a clear understanding of tax laws and regulations. It's an effective way to manage your estate, reduce tax liabilities, and provide for your loved ones.

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About the Author

Jason Johnson

Principal Attorney Jason C. Johnson received his Juris Doctor, with honors, from the University of Maryland School of Law and was admitted to practice law in Maryland in 2005. Jason started the practice in Annapolis after many years of law enforcement service. He was motivated to limit the pract...

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