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Maximizing Annual Gifts

Trusts & Estate Planning Attorney

by Kira S. Masteller


Individuals with estates that are valued over the Federal estate tax exemption ($5,250,000 in 2013) should consider making annual gifts to their family now so that those assets that would be received by the family anyway, will NOT be exposed to estate taxes unnecessarily.

Your estate includes your real estate, your bank accounts, investments accounts, retirement assets, life insurance, personal property and all other assets.

You are allowed to give $14,000 to as many individuals as you desire each year prior to December 31st without having to report the gift to the IRS and a gift of $14,000 or under will not be taken against your lifetime Gift Tax Exemption. This means that you can give your son $14,000, his wife $14,000, and each of his three children $14,000 so that you have removed $70,000 that would be taxed at a rate of 40 percent (in 2013) if you left it in your estate and paid estate tax upon your death.

You can also directly pay tuition for students (your children, grandchildren and great- grandchildren), and health care expenses for your family that will not be included in your lifetime Gift Tax Exemption. This is another way to help your family and reduce your exposure to Federal estate tax at the same time.

Of course when you have less assets in your estate, you may earn less income. This is something to consider prior to making gifts. Alternatively, if you are paying excessive income taxes, by reducing your income annually, you will pay less income tax annually.

If you have any questions regarding making annual gifts, you should contact your estate planning attorney or accountant to determine whether or not you should plan to make annual gifts to reduce the value of your estate.


Kira S. Masteller is a Trusts & Estate Planning Attorney and Shareholder at our Firm. Contact her via email: for further information.


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