If you have further questions or concerns regarding the increase in the annual gift tax exclusion, keep reading and reach out to our firm today to speak with a dedicated and experienced Montgomery County estate planning attorney.
What is the increase in annual gift tax exclusion?
Starting in 2022, the annual exclusion for federal Gift Taxes was increased to $16,000 per individual yearly. Despite a near-universal acceptance, gift-giving can play an important role in estate planning, a person should evaluate a number of matters before making gifts.
The way that gifts are made can have a big impact on beneficiaries. This is particularly valid if the party who receives a gift is under the age of 21. Direct gifts made to young people can have their own challenges which include disclosure to creditors and little control over how gifts are created. Because of this, it’s a wise idea in these situations to consider placing gifts in a trust.
What is the danger behind direct gifts?
If an individual is gifting assets to a beneficiary, it can leave a gift powerless to a number of risks. Direct gifts are subject to any creditors attempting to collect money from a beneficiary and can be at increased risk in case of a divorce. If a beneficiary passes away and has an incomplete estate plan, unexpected beneficiaries could receive these assets or other obstructions may arise.
If you have questions about how this may impact you and your estate plan, it is in your best interest to reach out to our Maryland estate planning attorneys. Our legal team is dedicated to ensuring you are making educated decisions to protect your and your family’s tomorrow.
How can I use custodial accounts?
If an individual receiving a gift is a minor, a custodial account can supply some help in construction. The extent of flexibility supplied by custodial accounts, however, has its drawbacks. For example, many times when the subject of a custodial account achieves the age of 18 or turns 21, all assets in a custodial account are immediately passed on to the recipient, which includes all investment and management choices. Once this occurs, nothing stops a recipient from wasting the custodial account or making unwise investment choices. Another potential challenge is change in custodians following death or incapacity before a beneficiary reaches the age of 21.
Contact our experienced Montgomery County, Maryland firm
The attorneys at JD Katz have years of experience compassionately guiding clients in Maryland through the estate planning and administration process. Our firm also has experience with matters of elder law, business law, tax law, and litigation. For a legal team that will put your needs first, contact JD Katz today.