What Role Does Timing Play in Making a Financial Gift?

Making a gift to someone is a worthwhile consideration as part of your estate plan, but there are numerous factors to be evaluated and discussed in advance. For example, the question of β€œwhen?” is often the most important one you can address with your estate planning attorney.

There may be benefits to making a gift during your lifetime, establishing a gift that transfers to your chosen beneficiary upon your death, or a gift that transfers to a child or grandchild after the second spouse passes away. The current gift tax exemption is another consideration particularly for high-net-worth individuals and families.

Right now, individuals are able to gift up to $12.06 million on their own and married couples can gift as much as $24.12 million in their lifetimes without generating any additional taxes. Currently, however, that gift tax exemption expires at the end of 2025, at which point it drops to $5 million per individual and will be continually adjusted for inflation.

Make sure that you discuss all of your estate planning options and the intentions you have for making a gift to a loved one in advance. The support of an attorney is very valuable in helping you establish strategies, documents, and tools to align with your personal goals for estate planning reasons.

If you want to make a gift now to maximize the gift tax exemption, make sure it aligns with your overall estate planning goals. If you intend to make the gift in the future, work with a lawyer who can assist you in determining the most efficient and effective manner for transferring that asset.

Need help? Reach out to our Pasadena estate planners now.

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