The federal estate tax exemption stands at $5.45 million in 2016, and there are a variety of ways that people can take advantage of it. One particularly popular option is using gifts. People are allowed to give up to $14,000 per person per year as a gift without it counting against their estate tax exemption. Additionally, married couples are able to give joint gifts, allowing couples to give gifts of $28,000 to a person every year.
In addition to just writing someone a check, people may also want to consider gifting stocks or property. It’s important to note that if a person gives another individual a gift, it may be a good idea to do it at the beginning of a year. If a person does not accept it in time, such as cashing a check after the new year, the gift exemption may not apply to the year it was intended.
There are also some types of gifts that do not count against someone’s estate tax exemption. For example, if paid directly to the institutions in question, payments for education at a private school or college or payments for medical bills do not count towards someone’s gift or estate tax deductions.
In addition to estate planning techniques that can minimize the estate tax burden, there are a variety of other documents that an estate planning attorney may recommend under certain circumstances. For example, trusts can allow people to have more options when distributing assets to heirs, and powers of attorney can enable trusted individuals to make specified financial and medical decisions in the event that the principal becomes incapacitated.