Baby boomers are expected to inherit , while an overall $36 trillion is forecast to flow to all U.S. heirs over the coming three decades.
That’s a lot of capital that has the power to do a lot of good for families and the economy at large. On the flip side, .
7073彩票注册While no one wants money to color their familial relationships, sometimes gifts based on perceived needs can create resentment. An uncomfortable competition sets in: Who is getting what becomes increasingly central, even if your intentions are good.
So how can you do more, and give more, yet keep expectations in check? Here are four strategies to consider.
First things first. Recent tax law changes have moved the goalposts so far downfield as to make the issue of estate taxes moot for all but the very wealthiest of Americans.
Anybody with a few million saved up for retirement can for now completely forget about so-called “death taxes.” The current exemption is $11.4 million for an individual and double for a couple.
7073彩票注册In 2017, for instance, just 0.2% of estates — 6,460 out of 2.7 million estates, . The higher exemption could expire in 2025, but even if it returns to the old limit of just above $5 million that’s still far more money than most people have to leave behind.
Here are four ways to think about giving you money away in life:
Gift strategy No. 1: If you are worried about a lower exemption limit there’s an easy fix. You can give away up to $15,000 annually to anyone you want and those gifts are not applied to your lifetime exemption.
Gift strategy No. 2:7073彩票注册 If you decide to help out with a child or grandchild’s education, medical or dental bills, those amounts also are not counted against your annual gift limit. Keep in mind that you have to pay the doctor or the school directly, not the person, and there are rules on what counts as “educational.” Talk to your tax preparer or CPA before writing that check.
Gift strategy No. 3:7073彩票注册 You can put money into a 529 college savings plan for the benefit of a child or grandchild and not touch the gift tax limits there, either. The IRS will let you give five years’ worth of 529 contributions in one year (so, up to $75,000 or $150,000 as a couple) beyond the gift exclusion.
Before you gift, consult with your state’s college planning board. Most won’t let you contribute more than the total cost of an education that state. In addition, a large 529 gift can affect the student’s financial aid prospects down the road.
Gift strategy No. 4: Want an alternative to cash or college contributions? You might want to leave them stock. That’s fine, but remember that “unearned income” from any investments you pass on — that’s interest and dividends — is taxed. They also won’t get the step-up basis at your death, so they could owe capital-gains taxes later on.
7073彩票注册A should double in value every decade. Whether that money is in the hands of parents, adult children or in trust to youngsters won’t change the fact that money compounds over time. , an early start matters.
Be fair and transparent with your kids about money matters and they’ll understand. Be vague and evasive and they’ll be suspicious.
7073彩票注册Most important, talk to a about your plans to finance your kids and grandkids lives today, while you can make tax choices that will help build a lasting legacy for all.