Tax-Free Gifting Is Possible

You may be aware of the existence of the federal estate tax. This tax can significantly erode your wealth, because it carries a 40 percent maximum rate. There is a marital deduction that allows you to transfer unlimited assets to your spouse tax-free, as long as your spouse is an American citizen, but transfers to others can be subject to taxation. Lifetime gift giving could seem like the solution if you are exposed to the estate tax. You could simply give your loved ones their inheritances in advance to sidestep this tax. Unfortunately, this is easier said than done, because there is also a gift tax in place. It exists to prevent people from implementing the lifetime gifting strategy as a way to gain estate tax efficiency. The gift tax and the estate tax are unified, and there is a $5.43 million unified exclusion. This is the amount that you could transfer tax-free. Because of the unification of these taxes, giving lifetime gifts using this exclusion would not provide estate tax effi


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