26 Sep
When people in Texas plan for a future in which they may no longer be present, they often have multiple decisions to make. Ultimately, the decisions that they make could impact how much of their estate their loved ones will have to enjoy. Because most everyone wants to ensure that the maximum amount of their estate goes to the intended recipient, those making such plans often consider whether gift giving in advance of their death is a necessary part of estate planning.
In the past, many people considered gift giving in an attempt to reduce the amount of taxes paid on the estate. However, this isn’t necessary for the vast majority of people in the United States. Currently, $11.4 million is exempted from federal estate tax — an amount that increases each year to account for inflation; as a result, only a very small number of estates are subject to federal taxes. Though the amount is set to fall to $6 million in 2026 if legislative action is not taken, only approximately 0.2% of people would be impacted if that were to happen.
Some people choose to give gifts as they plan for the future. That is, giving the money away in advance can prevent the funds from being taken to be paid for nursing home care, for example. However, any gifts given with within the five previous years will be scrutinized by the Medicare program and could disqualify a person for receiving certain benefits for a certain period of time.
For some people in Texas, giving a generous gift is less about estate planning and more about sharing with a loved one or friend. However, even gifts given out of generosity could have implications, making consulting with an experienced attorney before doing so prudent. Often, spending the time planning in the present can prevent complications for the most important people in a person’s life in the future.