When pre-planning funeral arrangements at Mesa AZ funeral homes, many people also consider their estate planning. If you have thought ahead, you most likely have an estate plan in place. If not, you will probably want to consider how you want your assets to be distributed upon your passing.
But some people decide to give financial gifts to loved ones before they pass away, rather than after. If this is the case for you, you may have some questions, such as:
These are all valid concerns that can have a significant impact on your overall estate plan. Here are some things you may find helpful:
2015 Lifetime Gift Tax Exclusions
The Internal Revenue Service recently increased the lifetime limit on tax-free gifts from $5.34 million to $5.43 million per donor. That’s another $90,000 that can be passed along completely tax-free. These are gifts that can be given to your heirs either before or after your death. However, there are some conditions that all donors must follow.
The annual gift exclusion remains at $14,000 per person (not per donor) before taxes need to be paid. This regulation allows donors to gift $14,000 per year to as many people as they like without anyone having to pay income taxes. The IRS completely ignores the financial transaction, and the gift has no effect on the $5.43 million Lifetime Gift Tax Exclusion. Spouses can also combine their annual gift exclusion, essentially doubling their gift-giving power.
However, any gift that exceeds this $14,000 per person per year will be taxed on the total amount at a rate of up to 40%. The gift will also count towards the donor’s lifetime limit of $5.43 million. The responsibility of paying the income taxes usually falls to the recipient unless careful attention is paid during the estate planning process.
The Gift Tax and Estate Tax Connection
While this is only a brief overview regarding the giving of financial gifts prior to one’s passing, there are additional estate planning factors to take into consideration. For example, there are currently nineteen states and the District of Columbia that impose separate state death tax levies. Arizona is not one of them. And while gift taxes are tied to estate taxes, inflation indexing can help wealthy donors maximize lifetime gifting as well.
Among Mesa AZ funeral homes, our caring staff at Mountain View Funeral Home believes in assisting with your needs however we can. And, while we are not in the business of estate planning, nor are we attorneys, we do want to provide you with useful information that can help you when you are involved in your pre-planning.
Contact us at Mountain View Funeral Home should you have any questions about pre-planning funeral arrangements.
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