2020 Annual Exclusion Gifts | Why You Should Give Before Year-End
The end of the year presents the perfect time to reflect on how your life has changed in the last 12 months and plan for the future accordingly. This is just as true for your wealth as it is for any other aspect of your life!
With 2020 being an election year, the remainder of the year offers an opportune time to give generously before tax laws potentially change in 2021.
Here’s what you need to know about making annual exclusion gifts before the end of 2020.
What is considered a “gift?”
In reference to estate planning, a gift is any transfer of wealth to an individual where the value of the transfer is not returned.
What is an annual exclusion amount?
An annual exclusion is the amount of money (whether in the form of cash or other monetary assets) that one person may transfer to another as a gift without incurring a gift tax.
The IRS determines this annual exclusion each year. For 2020, individuals can give away up to $15,000 to as many donees as they would like without those gifts reducing the donor’s $11.58 million lifetime exemption. For married couples who are interested in giving together, their combined annual exclusion per donee is $30,000.
Is the lifetime exclusion amount going to change?
Before the recent election, the basic exclusion amount was going to be reset to $5,000,000 on Jan. 1, 2026 (inflation adjustment not included). However, now that Joe Biden is the President-Elect, the new administration may reduce the lifetime exclusion amount as soon as 2021.
The IRS has stated that gifts made before the reduction will be honored, making the end of 2020 a very promising time to give.
For more information on annual exclusion gifts, contact our firm today.
Estate Planning with Lefkoff-Duncan
When it comes to estate planning, sooner is always better than later, and Lefkoff-Duncan is here to help. Our experienced team will assist you in all of your estate planning endeavors so that you’ll never again need to wonder if you’ve done enough to take care of the ones you love.