Year-end gifting

With the holiday season just around the corner, have you considered which gifts you’ll be giving to the important people in your life? If not, giving cash or securities as a gift may be right for you. Not only will the recipient enjoy receiving your gift, but there may be benefits for you as well.

Since individuals are now allowed to give up to $15,000 to another person in 2018 without incurring a gift tax, gifting securities or cash may help reduce the taxable value of your estate. You and your spouse can team up to double your gift, giving up to $30,000 to each individual without paying any gift tax. This tactic, which the IRS refers to as “gift splitting,” can allow you to quickly reduce your estate by a large amount.

It’s also worth noting that the lifetime federal gift tax exemption nearly doubled in 2018 to $11.2 million, giving people with larger estates the ability to move more assets out of their estates on a tax-free basis while they’re still alive. Of course, there’s no way of knowing whether this amount will change in the future, so if you have a large estate, you may want to take advantage of this opportunity while it’s available.

There are a variety of investments that may be utilized for gift-giving purposes, depending on the dollar amount you’re willing to spend. For example, U.S. Government securities are investments that can be purchased in relatively small amounts, or in higher amounts should you wish to give a larger gift.

Many people also find that the holiday season is a good time of year to give to their favorite charities. This year, you may wish to donate shares of stocks to your favorite charity in addition to, or instead of, cash. You might also consider making a donation to your recipient’s favorite charities on their behalf. Gifting to charities is a great strategy for assets that have appreciated in value, as it provides you with a tax deduction and allows you to avoid capital gains tax while reducing the value of your estate.

You should keep in mind that gifting — whether an outright gift, gift to a minor, or charitable gift — involves legal or tax issues that require professional assistance. You should consult with your legal and tax advisors for more complete information pertaining to your particular situation.

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Article provided by Michael Armon, Jr., Financial Advisor, with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange, who can be contacted in the Coeur d’Alene office at (208) 765-7007.