The season of gifting is a time when many people choose to maximize their estate liquidation opportunity by giving the ones they love money instead of “things,” says Jay Nabors, a Cleveland-based attorney who focuses on estate planning. But how much is too much? And will there be tax implications?
“The current maximum allowed without being taxed is $15,000,” Jay shares. “In 2022, that amount will go up to $16,000. If you stay within that range, the person giving the funds won’t have to report anything to the IRS.”
Jay had a client who recently wanted to gift more than the allowed amount, so he suggested the person give the allowable $15,000 in December, and $16,000 in January of 2022.
Something to consider, Jay says, is what your plans are for the future. “Medicaid has a five-year look-back period, so anything given away within that timeframe will come under scrutiny. It’s a good idea to sit down with an estate attorney to map out how and when to distribute any funds from your estate, so you aren’t penalized should you need to go into a nursing home and require the assistance of Medicaid,” he notes.
It’s also a good idea to meet with him to construct a disbursement timeline, even if your future plans include aging at home, instead of in a care facility. He can also ensure your home and valuables are titled properly to avoid probate.
As seen in the December 2021 issue of Mimi Vanderhaven.