Estate planning is important for Greenwich residents for several reasons. Not only does it help individuals set forth how and to whom items of property will be distributed, but it also helps them protect the value of the property that falls into their estate. End of life estates are subject to taxation, and the more value an estate holds, the harder it may be hit through estate taxation.
There are tax reduction strategies, however, that Connecticut residents can use to reduce the overall size of their estates. This post discusses several of them but provides no legal advice. Consultations with estate planning attorneys can assist readers with their estate and taxation questions.
Giving between spouses: Marital transfers
Spousal relationships are built on love and respect, and often spouses show their appreciation for each other through gift giving. Spouses can give each other gifts throughout the lifetimes, and those gifts are not subject to taxation. Therefore, if an individual wanted to reduce the size of their estate, they could choose to give to their spouse. It should be noted, though, that the spouse’s estate would then be liable for taxation when the gift-receiving spouse passed on.
Giving to children: Nontaxable gifts over time
Under the law, individuals can give family members like their children high value gifts each year. The amount that they can give varies over time, but in 2020 the gift exclusion amount is $15,000. That means that every year, a person could gift their kids $15,000 without taxation. Their spouse could also give to their children, meaning each child could receive $30,000 from their parents.
Giving, whether between spouses as marital transfers or between individuals and family members as gifts, is a great way to reduce one’s estate. Reducing the value of an estate can help an individual protect the value of their estate from taxation. Help with tax reduction during the estate planning process can be sought from trusted Connecticut estate planning attorneys.