The recently passed tax reform law doubled the lifetime gift tax exemption from previous levels. However, the exemption is scheduled to revert back to the prior level in a few years. If you want to take advantage of the increased limit, then you need to act quickly.
It is not always a good idea to gift large amounts of cash that can potentially be wasted by the recipient. Fortunately, there are many other options to protect the assets you wish to gift. News Max listed some of them in "Gifting Wealth and the Estate Tax Law Under Trump," including:
- You can create an LLC that holds stock or other investments and gift your family members an interest in the LLC. That allows you to control the investments during your lifetime, while still gifting to your family for their benefit and use later.
- If you own a company, you can create a trust and gift stock in the company to that trust for your family's benefit.
- It is a great time to fully fund any special needs trusts your relatives may have.
- Now is a great time to create and fund trusts that your family can benefit from later. If you have enough assets, you can even create a dynasty trust that will supplement your family for generations to come. An estate attorney can help you determine the type of trust that will be best for you and your family.
- You can help younger family members purchase their first homes.
- Consider funding retirement options or college savings accounts for younger family members, including purchasing annuities for them.
Reference: News Max (June 20, 2018) "Gifting Wealth and the Estate Tax Law Under Trump."