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What do you know about giving money to heirs in your lifetime?

On Behalf of | Oct 26, 2021 | Estate Tax |

To protect your money from the estate tax, you want to distribute assets while alive. How do you do so the right way?

The Kendal Corporation offers several strategies for giving gifts to heirs. Take advantage of opportunities while still alive to support your loved ones beyond your lifetime.

You may exclude dental, tuition and medical expenses

While it makes sense to understand the latest annual gift limitations, gifts for tuition and dental and medical bills do not count toward the limitation. To take advantage of this exemption, pay the gift to the school, dentist or physician directly. Room and board, school supplies and books do not count toward educational exclusions. You also cannot count health care your insurance covers toward medical exclusions.

The IRS caps tax-free gifts each year

Before using the gift-tax exclusion, learn what the IRS set as the year’s cap. If you have a spouse, the two of you have individual limits each year.

A 529 college savings plan helps you give more

You cannot exempt Georgia-sponsored 529 college savings plan contributions. You can pay five years of contributions with a single payment without enduring a gift tax. After contributing funds to the college savings plan, it defers federal returns and the lion’s share of state tax returns. You need not worry about paying taxes when withdrawing funds for approved education expenses.

Do you have a grandchild who plans to use financial aid for college? Rather than opening a 529 savings account yourself, let your adult child open the account instead while you contribute to it.

You should not pay more estate taxes than necessary. Understanding the rules for giving could put your estate and loved ones in better financial standing.

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