Our Families: Giving It Away


BOSTON (WBZ-AM) -- Happy Thanksgiving!

When you mention gifting what usually comes to mind is a birthday or Christmas. What I’d like to talk about today is giving an asset to another generation.

Your federal estate tax exemption, which is the amount you can give away tax free while you are alive or when you die, for this year is $5.49 million and if you have more assets than that your estate will owe federal estate taxes. Married couples have an unlimited gifting privilege between spouses in life or death. For 2018 the exemption increases to $5.6 million.

And for Massachusetts, your estate exemption is just $1 million. And it gets complicated. So if you have amassed the big bucks find a good estate-planning attorney to help you. The Massachusetts estate tax is a graduated tax with rates ranging from 0.8% to 16%.

As for your annual gifting exclusion each of us can give away $14,000 this year to as many recipients as we wish. And if we are married and our spouse joins in we can gift $28,000 to an individual. We can also pay someone’s medical or school bills without incurring a gift tax. And for 2018 the gifting exclusion increase to $15,000.

So why would we want to give away our money? Basically so we don’t have to pay an estate tax on it when we die. You can pare down your estate so there will be no estate taxes due. You can do this by  using your gifting exclusion.

For example, if you have an estate worth $1.2 million, it will owe no federal estate taxes but will owe Massachusetts estate taxes. Now would you rather give it away to your family now or to the government later?

Gifting can be an estate planning tool for you can save on future estate taxes and have the pleasure of watching your dollars work for your children or grandchildren while you are still alive. But do not give away assets you think you will need in the future.

If any of your grandchildren are in college or grad school you can pay their tuition and medical insurance, but you need to pay it directly to the school. And after paying the bills if you still have some money left over you can cut them a check for $14,000 and if your spouse joins in it could $28,000 for 2017.

You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m. and 3:55 p.m.


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