Alameda County Estate Planning Attorneys
If your individual estate is valued at more than $5.45 million, the American government is going to tax your estate during probate and take valuable resources from your inheritors. While this might seem unfair and somewhat discouraging if you spent your life working hard to save up finances for your loved ones, there is a fairly straightforward way to reduce your estate value and avoid estate taxes: gifting your assets. At Randick O’Dea Tooliatos Vermont & Sargent, Castro Valley Estate Planning Attorneys can break down the gifting process for you, help you gift portions of your assets without violating any regulations, and settle in for a restful chapter in your life.
What Can I Gift to My Loved Ones?
If your estate will be handled in California, you can only give away gifts valued up to $14,000 to a single person each year without being subjected to gift taxes. Any amount that goes over $14,000, even if it is just a dollar, will be taxed and you will lose some of the purpose of gifting in the first place.
You may gift any sort of valuable asset, such as:
- Real property
- Family heirlooms
Your gift limit doubles ($28,000) if you are married and share your estate with your spouse. If your goal is to avoid as much estate tax on your assets when you pass away as possible, you should be gifting $14,000 per year to as many loved ones as possible until your total estate value drops below $5.45 million.
Dividing gifts to avoid going over the $14,000 limit is simple when you are speaking of cash but it is also possible for noncash items. For example, if you own a condo valued at $140,000, you can transfer 10% of its property ownership to a family member each year for 10 years; this would equate to $14,000 per year and ultimately avoid any gift taxes. The breakdown and staggering of gifting serves as a clear reminder as to why you should begin estate planning sooner than later.
Who Can Receive My Gifts?
For the most part, you can gift anything you want to anyone you want, but it will make everything simpler if you stick to friends, family, and loved ones you have already named in a will or trust; less uncommon behavior means a lesser likelihood that your estate will get caught in probate.
There are two people you may not want to gift assets to:
- Spouse: You are actually permitted to gift as much property as you want to your spouse, so long as they are an American citizen. This might not be the best choice, though, because you could inflate their own estate value well beyond the tax limit after you pass away. If you wanted to avoid estate taxes, this is not the ideal way to do it, as you are really only transferring responsibility of avoiding taxes to your spouse.
- Children: Gifts given to children must be set to become entirely their property when the turn 21. Until that time, they do have control over it but may be regulated by parents or guardians. Not only can this cause confusion and possible stress upon the child, it could lead to wasted fortunes. Consider this: responsibly spending $14,000 can be a significant challenge for any child.
You should also not gift any piece of your estate that you know you want to keep for yourself. If you think that you may need additional finances in the coming years, do not gift away more than you are comfortable with. At the end of the day, gifting should benefit both you and the recipients.
Have Questions? We Have Answers!
Our Alameda County estate planning attorney is here to help you figure out what you want to gift, why you would want to gift it, and who you should probably receive it. We genuinely want to see you through this important part of your life with as little trouble or delays as possible. The sooner you sort out your gifting options, the sooner you can rest and relax, knowing that your estate plan is one step closer to completion.
Contact us today and we would be happy to answer any questions you may have about gifting assets.