In this Elder Law Minute, Wes Coulson discusses when gifts are subject to gift tax.
Transcript:
Hi! I’m Wes Coulson from Dent-Coulson Elder Law, proudly serving clients throughout the St. Louis metropolitan area and beyond. I’d like to welcome you to our Elder Law and Estate Planning Minute. We do these to help educate people, give them some little tips, and especially to let them know the questions they need to ask, things that they’ve maybe not thought of. Our thought on that is that we can help you best if you realize the things that you need help and that we can help you with. So I hope you enjoy. Thanks!
I want today to try to clear up a very, very common misconception. And that is, when is it that gift tax is due upon making a lifetime gift. Most people think that, if it is more than $15,000 in a year, there will be a gift tax, and so they will constrain themselves from making larger gifts. That amount refers to the current, as of 2021, annual gift tax exclusion. It’s $15,000 per every receiver, per year.
But, here is the big thing, that is not the only thing that applies. What people think of as the estate tax exemption, which is now $11.7 million dollars, is actually the unified estate and gift tax exemption. What does that mean? It means that, without there being a tax due, you can make a total of $11.7 million dollars of giving assets to somebody else, either while you are still alive, or when you die, or some combination of the two.
Many accounts think that if you are making a larger gift, during your lifetime, you should file a gift tax return to let the IRS know that you are using part of that exemption, but filing a return doesn’t mean that there is going to be a tax due. So, I, in a lot of cases, smilingly, tell people who are worried about a gift tax, “Well, unfortunately for you, you are several millions dollars short of that being a problem.”
Thanks!
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Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.
