Did you know you can gift more than $14,000 this year?
December 24, 2014
In any given year, anyone can give away up to $14,000 without triggering a gift tax. This is $14,000 per person per year. So, if you have a son, daughter, son-in-laws, daughter-in-laws, and grandkids, you can gift up to $14,000 a year to each one of them. Some individual’s gift actual stock and others may gift actual cash. The benefit is that this money comes out of your estate, which could help minimize estate taxes. The other benefit is that you are passing on funds today so you can watch the recipients enjoy the money today while you are around.
One way to speed up gifting is with the 529 plan. Only with the 529 plan you can gift today for the next five years. So, you can put $70,000 away today in a 529 plan, which is $14,000 per year for five years but then you are not able to make additional gifts for the next 5 years. This can be a great estate planning tool for people that want to take money out of their estate if they want to help kids or grandkids for college.
Prior to investing in a 529 plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefit that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.