Tips From the Pros: Your Annual Exclusion Could Be An Illusion
Nontaxable gifts may be an attractive component of a comprehensive estate plan. Structured properly, nontaxable gifts facilitate moving value out of the donor’s eventual taxable estate without erosion of the donor’s estate and gift tax basic exclusion amount1 or GST exemption.2 The simplest type of nontaxable gift is an outright gift of cash, directly to the target donee, within the gift tax annual exclusion amount. However, gifts in trust and gifts of certain types of assets can be problematic.
Annual Exclusion Gift Basics
Federal gift tax law permits a donor to make gifts (other than gifts of future interests in property), in each calendar year, up to an amount equal to the so-called annual exclusion ($19,000 in 2026) to any person: (1) …