Gifting Strategies You Should Consider

You may be making plans to leave certain high-value assets to your children or grandchildren in your will, or making similar bequests to other loved ones. Yet in some cases, it might make much more sense to make some of those gifts while you are still alive — both for purposes of taxes that will need to be paid by your estate, and for purposes of your loved ones being able to inherit without the complications and waiting times associated with probate. In short, for anyone whose estate may result in federal or Connecticut estate taxes due to its worth (currently estates of $13.99 million are taxed at the federal and state levels in Connecticut), you might want to consider certain gifting strategies.

By gifting assets during your lifetime, and over an extended period, you may be able to avoid estate taxes. And if there is not enough time left for this kind of gifting strategy to make sense in your situation, you may want to consider an alternative to a will, such as a trust. Our Connecticut estate planning lawyers can explain more clearly.

Making Tax-Free Gifts During your Lifetime 

In 2025, you can make tax-free gifts of up to $19,000, and the tax-free limit applies to a gift made to each donee, according to the IRS. In other words, if you have three children and six grandchildren, you can gift each of them $19,000 (or assets valued up to $19,000) without having to pay any tax. You can also make additional gifts up to that amount to parties of your choosing — the exemption is per donee or giftee each year, not the person making the gift.

This way, you can gift assets to loved ones that you would have left in your will or otherwise while reducing the total amount of your estate each year that you make such gifts — ideally with the aim of getting your estate below the estate tax threshold.

Establishing Trusts for Loved Ones 

If you set up an irrevocable trust, in most cases, those assets will not count toward the total amount of your estate for purposes of estate taxes. Accordingly, you may be able to establish one or more trusts for your loved ones in which you place assets that will ultimately go to them. Since an irrevocable trust is not owned by the party who establishes it, those assets typically will not be considered as part of the estate, and thus it may be possible to avoid the federal and state estate tax.

However, you should know that beneficiaries of a trust are typically responsible for paying taxes on the distributions they receive, so this will not be a way of avoiding any kind of tax altogether.

Contact a Canton Estate Planning Lawyer Today 

Do you have a high-value estate that you want to leave to loved ones, but you do not want to have to worry about estate taxes being deducted or your loved ones dealing with the complications of probate? You may be able to make a number of tax-free gifts during your lifetime, and you can also consider alternate ways to gift your assets to your loved ones without those assets being counted in your estate, such as a trust. To find out more, you should get in touch with an experienced Canton estate planning attorney at the Law Office of Brian S. Karpe today.

Sources:

cga.ct.gov/2024/rpt/pdf/2024-R-0197.pdf

irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

cga.ct.gov/2021/pub/chap_802c.htm