Valentine’s Day is that day of the year where we celebrate the love and affection we have for others by giving gifts. Cards, flowers, candy and often jewelry are the gifts of choice.
As your friendly estate planning attorney, I’m here to remind you that no gift is complete without the participation of your Uncle Sam and your friends at the Internal Revenue Service.
Among the forms of taxation imposed by the Federal Government are Estate and Gift taxes.
When the government decided to tax transfers of wealth at death (the Estate Tax), it soon became obvious that they would have to tax transfers of wealth during life (gift tax) or people would avoid the Estate Tax by giving away their wealth before death.
Fortunately for most of us we will never pay a dime in estate or gift taxes. Under current law, a person can give away $12,060,000.00 (as of 2022) over the course of a lifetime or on death without paying any estate or gift tax.
In order for the Internal Revenue Service to keep track of the gifts you have made over a lifetime you are required to file a gift tax return when you make a gift to any one person (including engagement rings) of more than $16,000.00 (as of 2022). You won’t have to pay any gift tax until you get to that twelve-million-dollar total, but in the meantime the IRS is keeping track of your progress.
The purpose of this column is not to spoil the romance of Valentine’s Day, but to remind you that estate planning is just about wealth transfers on death. Estate planning includes: taxation, separate and community property, pre and post marital agreements, as well as Wills, Trusts and powers of attorney.
Mr. Morris joined Hammerle Finley Law Firm in 1994. His areas of practice included Civil Litigation and Probate. He now primarily practices in the area of Estate Planning, Probate, and Medicaid planning.