Gift rule
I am confused re:the gift rule. I recently inherited money when my brother passed away. I would like to pass a large portion on to my adult children. I know the combined limit from my wife and I would be $36,000 per year. Can I give them more without tax penalty up to the lifetime limit without penalty/tax? Thank you.
Love your blog and your appearances on WGN TV and radio. You’ve taught me a ton over the last few years.
Terry Says
Before you start thinking of giving money away to your adult children, you need a financial plan for your own retirement! I know that’s not what you asked about, but please take this free advice.
Now, have you and your wife made a new estate plan of your own — preferably a revocable living trust? Watch this short video I made for details:
https://www.terrysavage.com/wp-content/uploads/2022/10/Terry-Talks-Wills-Trusts-Estate-Planning.mp4
Second, have you at least talked with a FIDUCIARY, FEE-ONLY financial planner about your retirement lifestyle, your own needs for income? Find one you can trust here:
https://www.terrysavage.com/pam-krueger-wealthramp/
Third, have you each thought about the potential cost of long term care? Perhaps a combo LiFE/LTC policy would be a better investment than gifting money to your children. It will pay for your care if needed, and if not, the money would go to your beneficiaries. Read this:
https://www.terrysavage.com/long-term-care-insurance-the-latest/
Now, to answer your specific question. This year (in then next week) you each can gift up to $18,000 without impacting your combined estate and gift tax lifetime exemption. Next year that goes up to $19,000. But the lifetime exemption from estate taxes goes up to $13.99 million in 2025.
So don’t worry so much about giving the money away, until after your death. Or at the very least, until you have a reasonable plan to finance your retirement.
