People who have high-value estates often want to find options for getting as much of their assets as possible to their beneficiaries. There are many ways to preserve assets to make that happen. One of these is through gifting, but there are specific considerations that must be taken into account in these situations.
Each year, the Internal Revenue Service provides a maximum gifting limit for exclusion for that year. This amount for 2025 is $19,000. This means that any gift over that amount will trigger the need to pay taxes.
What should you know about the gift tax exclusion?
The gift tax exclusion is set per year per person and per recipient. This means that a married couple could actually give a single recipient $38,000 because each spouse can give a $19,000 gift. There is no limit to how many recipients a person can give a gift to each year.
Gifting and inheritance taxes are two different taxes. They intersect in this estate plan strategy. By keeping the gifts below the gift tax exclusion limit and using gifting to reduce the size of the estate, it’s possible to maximize the amount of the estate that’s passed down to beneficiaries when the decedent passes away.
It’s still important for adults to have a comprehensive estate plan. This can help to ensure that their assets are all handed down in accordance with their wishes. It can also outline their wishes for if they become incapacitated so their loved ones know who should make medical and financial decisions for them.