Gifting Strategies in 2019
This summer has been busy in the Siperstein household as we excitedly prepare for the arrival of our baby girl in early October! As our house quickly fills with baby “necessities” (though I’m still not sure what they all do), I can’t help but think about how my perspective on financial planning will change once we have a daughter of our own. While I have advised on intergenerational planning for the past decade, it certainly will hit closer to home than ever before!
Here are some quick updates that could impact you:
Federal Estate Tax: Individuals can have a net worth of $11.4 million before paying any federal estate tax. This doubles to $22.8 million for a married couple. However, anything over this amount is hit with a 40% flat tax.
Federal Gift Tax: This basically follows the same rules as the Federal Estate Tax. Individuals can gift $11.4 million before paying any gift tax. This doubles to $22.8 million for a married couple. However, anything over this amount is hit with a 40% flat tax.
In addition, individuals can gift up to $15,000/year (couples $30,000/year) without counting against the $11.4 million exemption ($22.8 million for couples).
Rhode Island Estate Tax: The estate tax exemption is up to $1.5 million with a top rate of 16%. Rhode Island has no gift tax.
Massachusetts Estate Tax: The estate tax exemption is up to $1 million with a top rate of 16%. Massachusetts has no gift tax.
On January 1, 2026, the federal and gift tax exemptions will be basically cut in half. If you are affected by these limits, you may want to take advantage of this opportunity sooner rather than later. You have an opportunity to transfer significant assets to family members and loved ones free of federal taxes.
Although it may seem like you might have time to gift, Congress can always enact legislation to reduce these exemptions earlier. If you have any questions on how this impacts you, please just let us know!
Added 08/19/2019 by Jason Siperstein, CFA, CFP®