04-01-2019, 05:20 PM
BTW if they have millions then they could be giving it away while they are alive to avoid possible estate tax when they die.
It has been a while since I looked at the exact numbers, but here is the way it works. As a taxpayer you are entitled to a "unified credit" worth a few million dollars. If you wait until you die then that is the amount you can leave in your estate without triggering any estate tax. If you give that much away in a big chunk while you are alive you pay no "gift tax" but your entire estate is taxed when you die. So you can use that tax free unified credit to dispose of your assets tax free either while alive or at your death. But if you just give away a little bit each year (it used to be $10K per person per year) it does not reduce your unified credit. So if you start early you can give away a lot of money while you are alive without ever reducing your unified credit and you can still leave millions tax free when you die.
It has been a while since I looked at the exact numbers, but here is the way it works. As a taxpayer you are entitled to a "unified credit" worth a few million dollars. If you wait until you die then that is the amount you can leave in your estate without triggering any estate tax. If you give that much away in a big chunk while you are alive you pay no "gift tax" but your entire estate is taxed when you die. So you can use that tax free unified credit to dispose of your assets tax free either while alive or at your death. But if you just give away a little bit each year (it used to be $10K per person per year) it does not reduce your unified credit. So if you start early you can give away a lot of money while you are alive without ever reducing your unified credit and you can still leave millions tax free when you die.
