Strategic Gifting Can Help Build and Preserve Your Wealth

Strategic gifting allows people to pass along a limited amount of private wealth annually without incurring taxes. The attorneys at McKinley, Conger, Jolley & Galarneau, LLP, can help to protect your assets and your financial well-being, allowing us to partner with you as you undertake actions of strategic gifting private wealth.

What Is a Gift Tax Exclusion?

Every April, Americans wait anxiously to learn what, if any, their additional tax liability will be. The goal of most is to walk away even and owe no more than has been withheld from their paycheck year-round or get a refund. In order to minimize taxes, taxpayers look to deductions and other tax breaks. One way to decrease tax liability is to gift funds, on an annual basis. If you are able to do this, there is an exclusion that applies and allows you to make these gifts tax free. Proper planning and use of these tax breaks will lower tax liability, and provide the financial gifts intended by the gifter.

Lifetime Exemptions from Federal Gift Taxes

A basic understanding of this tax mechanism is needed if you make enough money to gift funds to friends or relatives, and the first concept to make clear is that it is the gift giver that pays any tax and not the recipient. Because of this scheme, it is critical to find ways to lower the amount of tax and understand the limitations during the lifetime of the gifter.

Benefits of a Trust for Transfers of Assets

Many families work hard to preserve wealth for future generations. This can be done by establishing a trust. A trust provides financial benefits and helps safeguard assets in several ways:

A trust designed for many generations can save the beneficiaries thousands or millions because when it is done properly, as certain trusts are not subject to estate or gift taxes.
Gifts may be made to the trust and result in substantial tax savings as well as grow the wealth within the trust.
Many assets included in a trust are outside the reach of creditors, thus giving protection to the funds and allowing the trust assets to be used for many generations.
When conditions of use are placed upon trust assets, those that fund the trust can rest easy knowing the beneficiaries will be required to act (or refrain from acting) in a certain way. This type of trust can promote the continued education of the beneficiary or ensure family funds stay in the family.

Setting up a trust must be done with an eye towards the intended result. Our job is to take an in-depth look at your long-term goals and develop a plan that meets your needs.

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