On behalf of Kadish & Associates Law Group posted in Estate Planning For Business Owners on Friday, May 4, 2018.
If your estate is going to be a considerable size when you pass away, you might want to take steps now to reduce the size of it so that your loved ones won’t have to pay estate taxes. While there isn’t an estate or inheritance tax in Arizona, there is an estate tax imposed by the federal government. This tax only applies to estates that are valued at $5.49 million or more.
It is important for you to realize that you can’t just go giving things away without thinking about the value of the items or assets you are handing over. There is a chance that if you give someone something that is worth too much, they might have to pay a gift tax. This would negate some or all of the estate tax savings you are hoping to achieve.
The federal government has a gift limit of $14,000 per person per year. If you are married, you can give a person $14,000 and your spouse can give that same person another $14,000. It is important for you to remember that the limit is based on a calendar year, so you have from Jan. 1 to Dec. 31 each year to give gifts for that year. You can’t give them retroactively.
Giving a portion of an asset in a year and holding that asset as a joint one between you and the recipient can help you give away larger assets. Just make sure that you are considering the value of the asset and ensuring that you don’t go over the federal limit for paying down your estate.
Source: FindLaw, “Reducing Estate Tax – Gifts,” accessed May 04, 2018