Livens & Reed, PLLC

Reduce Texas estate tax through giving

Estate planning can ensure accurate distribution of assets among one's beneficiaries. It's vital for Texas residents to be aware of estate tax. Grantors may be able to avoid estate tax through giving.

A retired couple is considering giving a certain amount per year to their 25-year-old son. They would like to do this in order to reduce the amount of their estate, but they are unsure if the funds can go into a trust for their son or if they must give it directly to him. Reportedly, grantors can give their family up to $14,000 per year without the worry of incurring estate tax. Since this is a married couple, they are allowed to give up to $28,000 per year.

In regard to how the money should be given, the couple may place the funds into a trust. Since they are concerned about how much is given each year to their son, they may place limitations on how the funds are distributed and for how much. It is recommended that the couple appoint a trustee to disperse the funds in regard to their wishes.

Being well-informed about state and federal estate tax in Texas can add more value to the receiving beneficiaries. Furthermore, beneficiaries may have even more to gain when the tax implications are low or non-existent. Sitting down with a support system that is knowledgeable about estate tax can assist grantors with drafting up a well-organized estate plan and carrying out their intentions upon their passing. This may also reduce the possibility of ending up in a courtroom.

Source: Ventura County Star, "Smart Money: Couple plans to reduce estate by giving to son", , March 29, 2014

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