The IRS has announced that the gift tax exclusion has been raised for 2018. A person can gift an annual exclusion of $15,000 without any gift tax consequences. Which means that you and your spouse could gift a child a total of $30,000 without any gift taxes.
The lifetime limit was raised to 11,180,000. Double that for a married couple. This is the amount you can now leave to an heir with no tax consequences.
How does this affect you? Consider that you are a high net worth client looking to avoid estate taxes. One strategy you could use is to begin gifting assets to lower your net worth.
For example. John and Jane Doe are clients that are high net worth. They have 3 kids and they need to lower their overall assets to avoid estate taxes.
John could gift $15,000 per year to a child. For a total of $45,000.
$15,000 to child A, $15,000 to child B and then $15,000 to child C
Then Jane could do the same thing. Gifting each child $15,000.
That’s a total of $90,000 per year they can gift to their kids to lower net worth without tax consequences.
These gifts don’t even have to be to children. You could to it for grandchildren maybe funding a 529 plan. Or even gift to a charity.