For many, “inflation” might as well be a four-letter word. But in terms of the federal estate and gift tax exemptions for 2018, it seems to be inflating smiles and opportunity for many.

In the New Year, estate and gift tax exemption will be $5.6 million per person and $11.2 million for married couples. The annual gift exclusion will top out at $15,000, which is up one thousand dollars from where it’s sat at $14,000 for the last four or so years.

The $15,000 in wiggle room on gift tax offers great opportunity for many, as any one individual can make up to a $15,000 gift to as many other individuals as he or she would like without triggering the requirement to file a gift tax return. So, if you and your spouse have five grandchildren together, both of you could gift each of them $15,000 individually. This means you could gift a total of $150,000 without triggering the filing requirement.

How Do I Gift to My Loved Ones?

It is important that the gift be completed in the tax year contemplated. What this means is that if you give each of your children and/or grandchildren $15,000.00 next year, they have to have the power to use the funds and you, as the gift giver, must retain no power to control the funds. This means that you cannot simply earmark the funds for them in your revocable trust.

If the receivers of the gift are responsible adults, simply giving them the funds outright may be the best and simplest option. But if the recipient is a minor, or young adult who hasn’t yet proven themselves to be financially responsible, there are other options, including UTMA accounts, 529 college savings plans, and irrevocable trusts. You can also pay the funds directly to a third party who provides goods or services to the child, such as their college, landlord, or to purchase a vehicle. If the beneficiary of the gift is disabled and receiving government benefits such as SSI or Medicaid, ABLE accounts and Third Party Special Needs Trusts can ensure the funds are available for their care but do not render them ineligible to continue receiving these resources.

I have money, but no one to gift it to. What other options do I have?

You’re not alone. We help many people who don’t have any surviving family, or perhaps have family they don’t deem worthy to inherit their estate. Rest assured, there are literally thousands of legitimate charities just waiting for your donation. You could make a large donation (or several!) to an important cause in your life. You can make annual $15,000 gifts to a medical charity, like the Alzheimer’s Association or American Cancer Society, in remembrance and honor of a loved one. Or if furry, four-legged creatures are the love of your life, you can make a donation to a shelter or a veterinary school scholarship program. You can even make regular installment donations to your favorite community space, such as a park, assisted living facility, community center, or college.

Not the most exciting news of the New Year, but still very important.

Even if you don’t plan on making annual gifts of $15,000 to anyone or anything, these numbers are a reminder to think about your estate. Do you have some money or personal assets that you want to end up with a specific person? Do you want to start helping your child, grandchild, niece, or nephew saving for their future? Do you own anything that you just don’t want probated? These gift exemptions remind you of the opportunity that exists to assign a purpose to your hard-working dollars after you are gone, even if you don’t have the resources to do so during your lifetime.

Start Planning

2018 may not even be a thought for you yet (after all, Halloween isn’t until tomorrow!), but it really is just around the corner. So while you’re starting to think about your resolution list, take a look around. A lot can happen in 12 months. Are you prepared?

Contact us today to start planning: 248.399.3300 or