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A Strategy For Monetary Gifts For Family

March 2022

A Strategy For Monetary Gifts For Family

Have you ever thought about giving financial gifts to your kids or grandkids? Many affluent retirees and pre-retirees do this, often with an eye toward furthering family wealth.

First, the basics. The Internal Revenue Service for 2022 increased the yearly gift tax exclusion to $16,000, so as an individual taxpayer, you can gift up to $16,000 this year to a child, grandchild, relative (or any other person) without any federal gift or estate tax consequences. If you are married, this applies for your spouse as well. Gifts of $16,000 or less do not count against the lifetime exclusion amount for individual estates, set at $12.06 million for 2022 ($24.12 million for a married couple).

Speaking of that $12.06 million lifetime exclusion amount, it could be halved in 2026 if the Tax Cuts and Jobs Act sunsets – so time may be of the essence for parents or grandparents who want to transfer portions of their wealth to heirs tax-free. As you think about choices for monetary gifts, you may want to have a look at your estate strategy documents to see that they are up to date. This update on monetary gifts is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax or legal professional before modifying your tax strategy.1

 Yerba Buena Financial Partners and LPL Financial do not provide legal advice or tax services.  Please consult your legal advisor or tax advisor regarding your specific situation.