Unified Tax Credit – What is the Unified Tax Credit and Why You Should Care
In addition to the unified tax credit, individuals can give up to $15,000 a year to a recipient or recipients ($15,000 per gift to as many recipients regardless of how many people you gift) and not have to pay a gift tax. If you give more than $15,000 in cash or equivalent valued assets in a year to any one recipient, you should file a gift tax return. Any amount gifted over the $15,000 per year exclusion reduces the individuals unified tax credit. The person making the gift is responsible for paying the gift taxes. For example, if you gift more than the $15,000 to an individual, even a family member, you will be responsible for paying the “gift tax” on any amounts over the $15,000 exclusion. To avoid this tax, you need to report the excess amount on an IRS Form 709.
Please note that the 11.58 million dollar exception is temporary and only lasts through 2025. If, and that is a big if, the law is not changed to reduce the current unified tax credit, it is scheduled to revert back to the 5.49 million exemption (adjusted for inflation) January 1, 2026. Consequently, what action, if any, should you take before the law is changed to reduce the tax credit before the end of 2025?
If you are concerned that your total wealth may exceed any future unified tax credit or estate tax exception, you may want to consider strategies to take advantage of the existing 11.58 million dollar credit, such as gifting assets to loved ones outright or through a vehicle such as a trust or Family Limited Partnership. Other tools to transfer wealth and not subject the assets to a 40% estate or gift tax could be a Family Foundation, Charitable Remainder Trust, an Irrevocable Life Insurance Trust (ILIT) or even a Qualified Personal Residence Trust (QPRT).
There are a number of strategies to transfer a portion of your assets or future estate to the next generation without losing access to the assets during your lifetime. If you wish to discuss what, if any, steps you might consider to take advantage of the unified tax credit before it is reduced, please do not hesitate to contact our office.
The legal information in this blog entry is not intended to be a substitute for seeking personalized legal advice from an attorney licensed to practice in your jurisdiction. Further, nothing contained in this article is intended to create an attorney-client relationship with any reader. This article and website are made available by Waldron & Schneider for educational purposes only and to give basic information and a general understanding of the law, not to provide specific legal advice. By using this website you understand that there is no attorney client relationship between you and Waldron & Schneider. The article and website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. For more information or questions you can contact us and one of our attorneys will be in touch soon.
Waldron & Schneider wishes everyone a safe and Happy 4th of July. ... See MoreSee Less
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Associate Attorney Collin Bullard writes about the disadvantages of a general partnership in his blog.
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Disadvantages of a General Partnership
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Disadvantages of a General Partnership The Texas Business Organizations Code defines a partnership as “an association of two or more persons to carry on a business for profit.” Whether those indiv...1 CommentComment on Facebook
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Waldron and Schneider wishes Partner Richard Simmons a happy early 50th birthday!!! ... See MoreSee Less
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Congrats, Richard. Make sure to have some fun tomorrow.
HAPPY EARLY BIRTHDAY DAD
Happy Birthday!!🎉🎂
Associate Attorney Collin Bullard writes about the importance of buy sell agreements in his blog.
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The Importance of a Buy/Sell Agreement
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The Importance of a Buy/Sell Agreement Many small business owners understand the importance of creating an LLC or similar entity to protect the individual owners from potential liabilities of the c…1 CommentComment on Facebook
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Congratulations to Emily Simmons (daughter of partner Richard Simmons) who competed in the National American Miss Pageant this weekend! She was the Heart of service Winner!!! 4th runner up overall!! 3rd in Casual wear!!! ... See MoreSee Less
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