Advanced Strategies for Family Gifting and Lending

Gifting money to your loved ones can be an excellent way to set them up for financial success. And with the holidays on the horizon, now’s the time to plan. But before you write that check, there are a few things to keep in mind.

The IRS puts a ceiling on how much you can gift untaxed: In 2022, the gift tax exclusion is $16,000 per person per year (or $32,000 per person annually if you file jointly with a spouse). All in, the total lifetime gift tax exclusion for 2022 is $12 million for individuals and twice that for couples.

It’s possible to gift even more if you’re keeping wealth in the family. For instance, the marital deduction rule allows you to give as much money as you want to your legal spouse without any gift or estate tax strings attached. Similarly, an irrevocable marriage trustA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process. uses that unlimited marital deduction to pass your assets, including cash, on to your surviving spouse tax-free upon your death.

Another strategy to “gift above the limit” is to earmark funds for the education or medical expenses of family members. For instance, you can make a five-year accelerated gift, totaling $80,000 ($160,000 for married couples), to a beneficiary’s 529 plan. This eliminates your $16,000 annual gift exclusion for the recipient for the next five years, but it allows the money to grow tax-free for a longer period.

Non-cash gifts, including property or other eligible investments like some stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company., can also be spread out over several years—although that annual and lifetime cap applies to cash and non-cash gifts alike. All of this can help reduce the total value of your estate and minimize the taxes that might come due upon your passing.

Charitable giving and intra-family lending are two other tools to pass along wealth. These and other financial planning strategies come with additional stipulations. As always, please contact your wealth adviser to talk about the gifting options that are best for you. We’re ready to help.

About Adviser Investments

Adviser is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868.