Estate Planning: Some Gifts Aren't Subject to Taxation

Many estate gifts are subject to taxation, however, there are some gifts are not. Once you pass, your beneficiaries are going to be able to receive a certain amount of your estate, without paying any taxes on that gift. Depending on when you die, there will be a federal estate tax exemption that can be used when determining whether your beneficiaries will have to pay taxes. The government has consistently changed this exemption year after year, so you will need to see what the exemption is whenever it is applicable to you. For example, let's say that when you die, the estate tax exemption is $3,500,000. This means that as long as your estate is less than $3,500,000, it can pass on to your beneficiaries without incurring any taxes whatsoever. If your estate is bigger than that amount, they will have to pay taxes on the overage.

Unlimited Marital Tax Deduction

If you are married, your spouse will be able to benefit from an unlimited marital tax deduction. When you die, you can pass as much is you want onto your spouse without causing them to have to pay any taxes on the gift. Even if you had millions of dollars more than what the estate tax exemption is, they will not have to pay a dime of taxes. However, when you do this, you are going to increase the estate of your spouse. If you increase the estate substantially, when your spouse passes away, your children might have to pay taxes on the estate at that point. Therefore, sometimes it makes more sense to put part of your estate into a trust instead of giving it all to your spouse when you die.


Any gifts that you give to a charitable organization will not be taxed. As long as you are giving the gifts to a qualified charitable organization, such as a charity or a church, your estate is not going to have to pay any taxes. Just make sure that you get a receipt whenever you make the gift so that you can prove it whenever you file your taxes.


You can also help pay for educational costs for another individual without being taxed. For example, let's say that you wanted to pay for your grandchild's college tuition. As long as you make the payment directly to the university, this gift will not be taxed.


Paying for the medical expenses of another individual is also a gift that is not taxable. You will have to make the payments directly to the medical facility in order to get this exemption.


If you make political organization donations, you will not be taxed. If you are giving money to a candidate that is running for office, you will not have to pay taxes on this amount.

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