If you have been fortunate enough to acquire a substantial amount of wealth during your lifetime, you might be inclined to look for ways to share that wealth with those individuals you love, as well as reduce your potential estate tax.
Only you can decide whether your loved ones are responsible enough to manage a monetary gift at this time, but if you would like to see them enjoy some of the fruits of your labor while you are alive, here are a few things you should consider before making a financial gift:
1. Under current law, you may gift up to $15,000 (the annual exclusion amount) to any person in a year without having to file a gift tax return or pay gift taxes to the IRS. If you gift over this amount to any one person during the year, then something called your lifetime exemption comes into play. The current lifetime exemption amount is $11.4 million, but will increase to $11.58 million in 2020. Therefore, if a person makes a gift over $15,000 to an individual in a year, they use up a portion of their lifetime exemption, which they document with the IRS by filing a gift tax return, even if there is no gift tax due. If an individual gifts more than $15,000 to an individual in a year and has used up their lifetime exclusion amount then, that person will face a hefty 40% tax on the amount of the gift valued over $15,000.
2. If you are married, you and your spouse may each gift up to $15,000 to the same person in the same year, without gift tax consequences. The gift recipient does not need to be related to you.
3. What if you want to make a financial gift to your spouse? You are in luck! Gifts to spouses are generally unlimited and require no gift or estate tax payment. An exception to this rule: If your spouse is not a U.S. citizen, you are limited on the amount that you can gift tax free.
Family gatherings, holidays and special events are perfect opportunities to check in on your aging loved one’s health and well-being. If you suspect your loved one may be struggling with their mental health, here are a few signs you can watch for at your next visit:
1. Confusion, or increased problems with decision-making.
2. Loss of weight and decrease (or abnormal increase) in appetite.
3. New complaints of fatigue or insomnia.
4. Difficulty managing finances or calculating numbers.
5. A noticeable change in personal hygiene, appearance, or home maintenance.
6. Memory loss, especially short-term memory issues.
7. Depression symptoms lasting more than a few weeks.
8. A change in social habits; withdrawal from events and people they normally enjoy.
The last of the children have moved away from home. You’re officially an empty nester! If you’re like many parents, adjusting to this new found freedom and income will take some time. Here are some great tips to keep in mind as you plan for your future:
1. Schedule an appointment with a reputable financial planner or accountant to review your retirement plan and make any necessary adjustments to your savings and investment plan to accommodate the lifestyle you want to have in your post-retirement age. For example, you may want to lower your household budget because you no longer have expenses related to raising children, but possibly increase your personal spending because you would like to travel.
2. Examine your estate planning documents, old will and powers of attorney and make sure they still reflect what you want to happen if you can’t act on your own behalf. A few things you should consider: (a) Do any of your children have legal or marital concerns that might put their inheritance at risk? (b) Are any of your beneficiaries receiving government benefits, whose eligibility might be jeopardized by an inheritance from you? (c) Do you still want the same people acting as your health care or business powers of attorney? (d) If you plan to become a “snowbird” and travel out of state for extended stays, do you know if your current estate planning documents will be honored in your secondary state of residence? (e) Has your net worth increased significantly since you signed your will or trust? (f) Do you still want the same people named in your original will or trust as beneficiaries? (g) Have any deaths or births occurred within the family that would require an amendment to your will or trust? (h) Have you acquired any titled assets since you did your original estate plan (real estate, minerals, investments, vehicles, business interests, etc.)?
NEWS YOU CAN USE
Davis & McCann, P. A.,