Skip to Content

We are a Veteran Owned Business, providing 20% discounts for Veterans, First Responders, Elementary and High School teachers. Please contact us to set up a phone or Zoom meeting. Taking care of you and your family, It's What We Do!

Estate Planning and Gifting

Posted on Thu May 23, 2019, on Estate Planning

Gifting As Part of a Healthy Estate Plan

Estate Planning and Gifting can get a bit complex, this article is meant to give you a short, but understandable introduction.

Estate Planning Attorney Kelly Barse

If you are starting to look into planning your estate, the concept of gifting may have come up. You may have heard that it is an excellent way to avoid paying the federal estate tax, or that it is an alternative to creating a will. This simple guide will go over the basics of what gifting is, as well as what you need to know about how it works. Remember, this information is not a good substitution for speaking with an estate planning lawyer who will be able to give you information suited for your situation precisely. Estate Planning and Gifting, Let’s Talk!

What Is Gifting?

Gifting is as it sounds. You transfer an asset to someone else during your life. Rather than leaving a possession to a loved one in your will or a trust. Importantly, gifting is done before death. You cannot continue to use or profit off an item, business, or piece of property and then claim to have gifted it to someone else in your will. Gifting, legally, removes ownership from you and transfers it to someone else. The main benefit of gifting is that it is fast and straightforward. For the most part, you do not have to do anything special to gift an item to someone. There are a few exceptions to this rule:

  • The item has an unusually high monetary value
  • The item has a title or deed
  • You only want to transfer partial ownership

Federal Estate Tax

There is something called the federal estate tax, which taxes a portion of an estate when it is passed on. Most people never have to worry about the estate taxes on their property because it only applies to estates that exceed a certain amount. This set amount for the federal estate tax is very high. The value has changed a great deal over time, but currently, the value exceeds $11,000,000.00. The limit of the federal estate tax rises with inflation, and individual states may implement a different threshold, so you should research what the law is for your location. Gifts are usually exempt from all income taxation. Careful, though, as each state can have its taxes relating to gifts. 

Annual Tax Exemption Rule

Your estate plan, including gifting, should consider the Federal Gift Tax. If you plan to gift a part of your estate, you need to know about the annual tax exemption. The exemption is how much you can gift in any year before gift taxes start applying. For 2019, this amount is $15,000, but it also varies from state to state and rises with inflation. Further, the gift has to be to the person, not into a trust.  There are notable exceptions, such as UTMA accounts and 529 plans.

If you give a gift of $20,000, and the annual tax exemption is $15,000, the remaining $5,000 is subject to the gift tax. An estate attorney in O’Fallon, Missouri, can tell you more.

Estate Planning and Gifting can get complicated, so let’s talk.

Thanks to the Legacy Law Center for their insight into estate planning and gifting.

Tags:

Estate Planning, Estate Planning Attorney, Estate Planning Lawyer, Kelly Barse

Peter KlenkPeter Klenk

What Our clients are saying

Klenk Law Logo
Stars

Mr. Klenk has been easy to work with. I am confident he has given me good advice whenever I have called upon him. He has shown good work ethic and depth of knowledge in preparation of estate, wills, and trusts that I have worked with him on.

Klenk Law Logo
Stars

Sean Quinn

Great firm. Great people. Happy to refer folks in need to estate planning to Peter and his team. They do great work.

Klenk Law Logo
Stars

Chris Curcio

Fantastic customer service. Very personable and most importantly they provide great explanations of what is required based on your individual needs. Highly recommend Klenk Law for anyone that needs to create a will and estate documents.

Klenk Law Logo
Stars

Anne W.

I saw four lawyers and was told by all of them; I should just forget contesting my mother's will. I knew what happened, but it is very hard to prove undue influence. I contacted the Law Offices of Peter L. Klenk & Associates. Attorney Amanda DiChello took my case. They were very honest and upfront about what would be involved trying to prove what I knew was true. Attorney DiChello may be young but she is extremely knowledgeable and skilled. She listened and understood what I conveyed to her. She knew exactly what information to use and crafted an outstanding interrogatory and many powerful depositions. Attorney DiChello understood the various emotional feelings this case created for my family and me; she was always there for us with a kind and encouraging word. We went to trial. The amount of work which she and her Paralegal did for the trial was incredible. They both knew my case inside and out! Attorney DiChello's powerful interrogative and thinking skills produced a positive outcome. Attorney DiChello did what other seasoned lawyers said was impossible!

Klenk Law Logo
Stars

Sheldon P.

Everything about my experience was a 10+! Peter and his staff made what I thought would be a difficult process easy and understandable. Every detail was handled correctly. No other firm could possibly do better than Klenk Law!

Let us put our expertise to work for you.

Free consultation within 24 hours.