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Caring For Generations

Annual Giving – a Methodical Approach to Estate Planning

by | Jul 3, 2024 | estate and tax planning, Estate Planning, estate planning for college students, estate planning lawyer


Absent new legislation between now and January 1, 2026, Daniel Rahill cautions in Financial Advisor Magazine, the lifetime estate and gift tax exemption is set to plummet, creating a “use it or lose it” situation. On the positive side, the author notes, the IRS has clarified that benefits used under the current exemption amounts will not be subject to “clawback”. That makes now, he emphasizes, an opportune time to act, not only for the ultra-wealthy, but for individuals and couples poised for significant future asset growth..

What about those of more modest means? At Geyer Law, we were gratified to note that the author alludes to “core estate tax planning techniques” that can be advantageous for all clients who want to transfer wealth to the next generation, including annual and certain lifetime gifts:

  • Annual exclusion gifts
    The annual exclusion is $18,000 per individual ($36,000) per couple, given to as many recipients as desired.
  • Direct tuition payments
    There is no dollar limit on direct payments of tuition to an educational institution on behalf of an individual.
  • Direct medical expense payments
    There is no dollar limit on direct payments to medical providers on behalf of an individual.

As clarified by the American College of Trust and Estate Council (ACTEC), direct tuition and direct medical expense payments do not need to be reported on a gift tax return.

Annual giving, the author concludes, represents a methodical approach to estate planning and estate tax reduction. At Geyer Law, we find annual gifts to be a highly useful estate planning tool for a broad range of clients for two main reasons:

1. Both the present value and any potential future growth of the assets are removed from the client’s taxable estate.
2. Giving when the client’s friends or relatives need help is more meaningful than waiting to pass on a larger amount after the client’s death.

Annual giving is a way of taking a methodical approach to estate planning.

– by Kristina Shover, Associate Attorney with Rebeccaca W. Geyer