This week on the Retirement Quick Tips Podcast, the theme is: your 2021 Year-End Tax Planning Checklist

Today, I’m talking about gifting. Truly, one of the most confusing parts of the tax code - at least in my experience working with clients - are the rules on gifting. 

Gifting, especially during your lifetime, can be a powerful strategy to transfer wealth, business interests, property, and a variety of other assets to your family and heirs, and with the current generous gifting and estate tax rules, now is the time to gift. So a question I pose to you that is very important to consider now is are you in a good financial position to gift now? 

You can give up to $15,000 per gift recipient in 2021 without paying taxes and up to $30,000 per gift recipient if you're married. But what happens if you want to give more than that?

You can actually give substantially more to your heirs without being subject to tax. The additional gift will just be applied to your lifetime exemption. 

Let’s say you own a family business worth $3 million dollars. Would you be shocked to learn that you can actually gift that business to your children during your lifetime without paying tax on that gift? 

That’s because of the lifetime gift tax exemption, which is currently $11.7 million in 2021. This means that you can give up to $11.7 million in gifts over the course of your lifetime without ever having to pay a penny in taxes on those gifts. And if you are married, it’s double that amount. You and your spouse can give away more than $23 million in your lifetime, tax-free.

Even if taxes don’t go higher next year, this high exemption is scheduled to sunset anyways in 2025, so now is the time to gift. Personally, the gift and estate tax exemptions are so high at the moment, that they have big targets on their backs...It’s low hanging fruit for congress, and likely to change - as of this recording it’s uncertain how or when it will change, but I would gift now because the clock may be ticking on you being able to take advantage of the current gift tax rules and these rules may be changed sooner rather than later. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance