The Annual Gift Tax Exclusion Is The Gift That Keeps On Giving

In the lead up to the holidays, children are occupied with thoughts of gifts that they want to find under the Christmas tree. They will work the subject into every conversation, describing their gifts in great detail, no matter how implausible it is that they will receive them. Perhaps your grandson wants a pickaxe so that he can build a basement and find diamonds in it, just like in Minecraft, and you don’t have the heart to tell him that, not only could you get in a lot of trouble for giving a child a pickaxe, but also that basements in Florida are not a thing. As for adults, complaints about financial stress dominate every conversation. Most of the time, complaining is one of the most fun things you can do, especially when the complaints are about how much money you don’t have and how much you had no choice but to spend. At the holidays, though, the financial stress is so bad that complaining about it only makes you feel worse. Even if you are not wealthy, you are in a position to help by giving your adult family members gifts of money. If they protest and say that they are just complaining about money for fun, you can point out that giving them a gift helps you, too. For help understanding the paradoxical aspects of estate planning, contact a Tampa estate planning lawyer.

How Much Money Can You Give?

The annual gift tax exclusion is one of the easiest and most fun estate planning rules to follow. Every year, the IRS sets an amount of money that people can give without paying gift taxes. In 2025, the amount is $19,000. This means that you can give cash gifts of up to $19,000 per recipient to as many recipients as you choose without paying gift taxes. The best news is that you can do it all again in 2026, when the limit will again be $19,000. The lifetime limit for giving tax-free gifts, as long as you give them in denominations below the annual gift tax exclusion, is millions of dollars. You have probably never met anyone wealthy enough to max out the lifetime limit for annual cash gifts.

Everyone Wins When You Give Cash Gifts

The most obvious reason to give cash gifts is that they bring financial relief to the recipients. If you need another reason, it is that, if you are trying to spend down the value of your estate, it is better to do it early and do it gradually. If your children protest, tell them that the gift you are giving them is of relatively low value, and next year, you will reevaluate the situation to see if they need another cash gift and whether you can afford to give it to them.

Contact David Toback About Cash Gifts as an Estate Planning Tool

A Central Florida estate planning lawyer can help you make estate planning moves that fuel everyone’s holiday spirit.  Contact David Toback in Tampa, Florida to set up a consultation.

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