As the year has come to a close, many in Tennessee are turning their attention to their finances for 2015 and looking ahead for changes that should be made in the coming year. In regard to estate planning, many families are ready to begin implementing plans to pass on an inheritance to loved ones. Doing so in a manner that also helps to reduce or avoid estate taxes is a top priority for some.
Most wealthy people are aware that they are able to pass down more than $5 million in assets before federal estate taxes will apply. However, if assets currently exceed that amount, it may be wise to begin giving children and others their "inheritance" now, instead of waiting. Individuals can give loved ones an annual "gift" of $14,000 per person without incurring a gift or estate tax.
Giving during one's lifetime allows individuals to see their loved ones benefit from this generosity. It has the added benefit of reducing one's taxable estate. In many ways, it is a gift that has two parts; one that can be enjoyed now and another that will be fully appreciated when the estate is handled after a death.
For those in Tennessee who are interested in crafting a plan to reduce their taxable estate and begin distributing an inheritance to loved ones, it may be time to discuss the matter with an estate planning attorney. Each family will have a unique set of needs. That said, there are certainly circumstances in which gifting is not the best option.
Source: investors.com, "5 Changes To Make To Your Financial Plan Now For The New Year", Marie Beerens, Dec. 18, 2015