Creating a Legacy with Holiday Gifts: Looking Beyond the Top Ten Gift Lists
The holidays can be such a joyful time, a time of traditions and family: the annual neighborhood ugly sweater party; the yearly family photo by the fireplace, children growing each year; the squeals of grandchildren as they set out cookies for Santa or light the menorah; the glow of candles, the smells of cooking, the warmth and light of family. All of these lovely memories are also part of your legacy. When the time comes for family to gather and exchange gifts and memories, it’s a good time to think about your legacy and how you will share it with your friends, family, and community.
This holiday season think beyond the top ten gift lists, the Ugg boots, the latest PlayStation console, and the sparkly jewelry. You can use annual gifts as part of your legacy, distributing your assets how you’d like both during your life and after, and possibly lowering your estate tax burden. This can help ensure that you lose as little of your legacy as possible to taxes.
Annual Gift Tax Exclusion
In 2019, you can make an unlimited number of tax-free gifts, as long as the gift to each individual doesn’t exceed $15,000. This amount is doubled for couples, so you and your spouse can gift $30,000 annually. Even if only one spouse gifts the amount, the IRS will automatically consider the other spouse to have consented to the gift and to have made half of it, making lifetime gifting even easier as part of your living legacy.
Consider the Timing
You can only give one annual gift to each individual of $15,000. If you miss a year, you can’t go back and claim an exemption. But you can also spread a gift over multiple years to avoid the gift tax. For example, if you gift your daughter $20,000 on December 25th, $5,000 of that can be taxed and you’ll need to file a gift tax return by April 15th. But if you gift her $10,000 on December 25th, and $10,000 on January 2nd, you’ll avoid the gift tax.
Your family, your friends, your community, and your traditions are all part of your legacy. This holiday season, stop and enjoy the life you’ve created and the people you love. When we give gifts to those we love, whether in a wrapped box or not, we get just as much as we give. Wilson Miller is here to help, call us, 501.221.7776.