Tampa Gift Taxation Lawyer

In creating an estate plan, your goal is to preserve your wealth during your lifetime and maximize the legacy you leave to future generations. One critical aspect of achieving these goals involves minimizing the tax impact of your gifts to others. The estate planning attorneys at Messina Law Group provide practical advice and strategic estate planning that considers the tax consequences of gifts you make during your lifetime alongside the inheritance you create. Make sure your giving is conducted thoughtfully in the best interests of you and your beneficiaries. Contact our experienced Tampa gift taxation lawyer today.

What Is Gift Tax?

The gift tax is a federal tax imposed on the transfer of property or assets from one individual to another without receiving anything or less than full value in return. The purpose of the gift tax is to prevent individuals from avoiding estate tax by giving away their assets before death.

Annual Gift Tax Exclusion

The Internal Revenue Service (IRS) allows an annual gift tax exclusion, which is the amount you can give to any individual in a single year without incurring gift tax. For 2024, the annual exclusion amount is $18,000 per recipient. This means you can give up to $18,000 a year to as many people as you like without triggering the gift tax. If you are married, you and your spouse can each make separate gifts.

Lifetime Gift Tax Exemption

The annual gift tax exclusion must be considered in conjunction with the lifetime gift tax exemption. This exemption is the total amount you can give away over your lifetime without paying gift tax. The lifetime exemption is tied to the estate tax exemption, and as of 2024, it is $13.61 million. Any gifts that exceed the annual exclusion count toward this lifetime exemption. Again, this amount is doubled for married couples who each have their own exemption.

Gift Tax Rate

If you exceed the annual exclusion and the lifetime exemption, the excess gifts are subject to gift tax. The gift tax rate can be as high as 40%, depending on the amount of the gift. However, it’s important to note that most people never reach the point where they have to pay gift tax due to the generous lifetime exemption.

Gifts That Are Not Subject to Gift Tax

Certain types of gifts are not subject to gift tax, regardless of the amount. These include:

1. Gifts to your spouse: Gifts made to your spouse are generally not subject to gift tax, thanks to the unlimited marital deduction.
2. Gifts to charity: Donations to qualifying charitable organizations are not subject to gift tax.
3. Medical and educational expenses: Payments made directly to a medical institution for someone’s medical care or to an educational institution for tuition are exempt from gift tax.

Planning Strategies to Minimize Gift Tax

1. Utilize Annual Exclusion: Make use of the annual gift tax exclusion by gifting up to $18,000 per person each year. This can help reduce the size of your estate without incurring gift tax.
2. 529 Plan Contributions: Contributions to a 529 college savings plan can be a tax-efficient way to provide for a loved one’s education while reducing your taxable estate.
3. Irrevocable Trusts: Setting up an irrevocable trust can be a way to transfer assets out of your estate while retaining some control over how the assets are used.
4. Family Limited Partnerships: This strategy involves creating a partnership with family members and gifting shares of the partnership, which can be valued at a discount for gift tax purposes.

Contact Messina Law Group for Help With Gift Taxation and Estate Planning in Tampa

Understanding gift taxation is essential for effective estate planning. By making strategic use of the annual exclusion, lifetime exemption, and other tax-saving techniques, you can minimize your gift tax liability while ensuring your assets are distributed according to your wishes. It’s advisable to consult with our experienced Tampa gift taxation lawyer to develop a plan that aligns with your financial goals and complies with the latest tax laws. In Tampa, call Messina Law Group at 813-492-7798.