Hello!

Happy Sunday. Hope you are doing well and gearing up for the holiday season.

Today I wanted to talk about how you can be a real life Santa Claus this year.

Yes, I know he is real. :)

What I’m talking about is how you can take on his characteristics through the magic of gifting.

To begin, there are two types of gifts.

1. Charitable gifts.

2. Non-charitable gifts.

Charitable gifts are amazing in three ways from an estate planning perspective.

First, you get to see the impact of your gift while you are a live.

It really is powerful to meet the people who’s lives you have touched with your generosity.

Second, you get an immediate tax benefit from the gift.

Whatever you give (up to a certain limit that is generally REALLY high) is deducted from your income.

Translation = you pay less tax.

Third, you get to reduce the size of your taxable estate.

In WA state, remember, everything over $2.193M is going to face some state estate tax liability (generally).

If you have a cause out there that you are passionate about, I’d encourage you to contribute to it.

Moving on to non-charitable gifts, the rules are a little different, but the impact can still be great.

And, to be clear, when we talk about non-charitable gifts we are talking about giving money to individuals.

The IRS allows for gifts to individuals of up to $16,000 per person (parents could each give a child $16k and be okay).

In 2023 that number goes up to $17k.

You can give more than that in a calendar year, but if you do you will have to file a gift tax return (not PAY gift tax, just tell the IRS about it) and it will reduce your lifetime giving amount (currently $12.06M and going up to $12.92M in 2023) by the amount of the gift.

Like charitable gifts, when you gift while you are alive you get to see the immediate impact of your gift, though the data collected is a little bit different.

When you give to individuals you get to see how they handle the money.

Did they spend it frivolously?

Did they save it?

Did they spend it wisely?

It can give you a good window into how future gifts/inheritances might be spent.

Unlike a charitable gift, though, you do not get any income tax benefit from a gift to an individual.

You are required to pay income tax on that gift as if you kept it yourself.

And third, and finally, like charitable gifting, you do get the benefit of reducing your overall estate tax liability by reducing the size of your taxable estate.

As we head toward the end of 2022 it’s a great time to think about any gifts you might want to give to friends, family, and charity.

If you made it this far, thanks for reading!

Cheers,

Christopher Small
CMS Law Firm LLC

PS – if you want some nuts and bolts estate planning and probate info you can see all of it on my YouTube channel – http://www.youtube.com/c/CMSLawFirmLLC

And PPS – if you need help with estate planning or probate the easiest thing to do is click the link and book a time to chat – https://cmslawfirm.com