If you’re like most Americans, you like to give gifts nearly as much as you like to receive them.  Luckily, if
you’re serious about estate planning there’s a handy technique called gifting that can potentially save
your family, friends and heirs a lot of money on estate taxes in the future.

With gifting, you not only benefit yourself, you potentially save future generations from a heavy tax burden.
In addition to a reduction in taxes, by reducing the size of your estate, you generally reduce the amount of
probate costs and legal fees which can often eat away much of your estate.  So what exactly is gifting?

Gifting is exactly what it sounds like: a gift.  It’s a gift that can be given to a
spouse, a family member or a friend.  It’s a technique that has been used
frequently by people to reduce the value of their estate and can be done
several ways.

Each person in the U.S. can give assets or property of up to $12,000 a year.  
That amount applies to each individual they gift to.  This gift can be given to
basically anyone without paying any gift taxes, as long as the amount gifted
stays under the limit.  You can give gifts, tax-free, to as many people as you
wish.  You can also gift an unlimited amount of property to charity and your
spouse.

By law, you can gift a spouse unlimited amounts of property each year without
paying any taxes.  This isn’t always suggested however, since it just shifts the
larger estate burden onto your spouse.  One helpful technique is to team up
with your spouse and gift to specific individuals, such as children and
grandchildren.  When you and a spouse get together and gift, which the IRS
has termed “gift splitting,” you can give up to $24,000 to each individual
without paying any gift tax.  This allows you to quickly reduce your estate by a
large amount.

Gifting is also a great way to give assets to your family that will end up
appreciating in value.  That way, you not only reduce the amount that may be
taxed in your estate, but you reduce the amount that your asset would have
grown to by the time you passed away.

There are a great many details involving taxes and gifting that remain to be
seen.  The tax laws and regulations can get extremely complicated, which is
why estate planning is best left up to professionals.  But the main idea
remains, gifting can probably save your estate and your heirs’ money in the
long run.

While estate planning is often put off because of the uncomfortable topic of
death, it may be one of the most important financial planning tools available.  It may also be one of the
most important ways to save your family from heartache.  One mention of Terri Schiavo is all it takes to
conjure up memories of legal battles, congressional intervention, and a media circus that most certainly
missed the most important aspect of the struggle: Terri.

Gifting is simply one of the many convenient ways to leave a legacy that remembers your life for its
accomplishments instead of courtroom battles.  Whenever contemplating gifting, or establishing an
estate plan, it’s best to meet with a financial professional and a qualified estate planning attorney.  A little
bit of careful planning can go a long way. In the end, gifting allows you to take advantage of tax savings
and choose the way you want to be remembered, which is truly a gift that will keep on giving.

This article was submitted by Robert Valentine of Financial and Retirement Management.Robert Valentine is a well-known expert in the matters concerning investors. His articles on financial planning matters that concern investors have been published by several publications throughout the United States.