What’s the Best Way to Give Money? Are you leaving money to children and to grandchildren?

by | Aug 29, 2018 | Business News

There are several ways you might consider gifting money to your loved ones. In 2017, the IRS allows you to give up to $14,000 annually (or $28,000 if you give jointly with your spouse) in cash, investments, and/or property to each of as many people as you’d like without triggering gift taxes. (This limit may be adjusted for inflation in future years.)
If you’re thinking about giving money to minor children, such as a new grandchild, you might consider looking into The Uniform Gifts to Minors Act or The Uniform Transfers to Minors Act (UGMA/UTMA) — the name depends on your state. An UGMA/UTMA account allows you to establish a savings or investment account in a child’s name, with one adult named as custodian. Each parent or grandparent can contribute up to $14,000 annually without triggering gift tax. The child will receive control of the assets upon reaching the age of majority, which is typically age 18.
With an UGMA/UTMA strategy, the first $1,050 per year of unearned (investment) income is tax free. For children under age 18 or college students under age 24, anything between that amount and $2,100 is taxed at the child’s rate. Any income exceeding $2,100 is taxed at the parent’s rate. For children age 18 or older or college students age 24 or older, all income is taxed at the child’s rate.
Of course, asset gifts are not limited to young children or newborns. You can also give to as many adults as you’d like up to the $14,000 per person annual limit. Keep in mind, however, that the IRS considers the value of the gift its cost basis for purposes of computing gift tax to be its value at the time that it’s given, not when you originally purchased or invested in it. By making a tax-smart financial gift to an adult-aged child, you could help him or her fund a down payment for a home or afford to maximize contributions to an employer-sponsored retirement plan.
If you’re thinking about starting a gifting program, a qualified financial professional may help you evaluate which strategies might be appropriate for your situation.
© 2017 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.
For more information, please call Householder Group at 661-297-7566.

[bsa_pro_ad_space id=3]

ADVERTISE WITH US

ABOUT THE MAGAZINE

Santa Clarita Magazine has set a high standard for excellence in advertising for over 34 years. A family owned and operated business, Santa Clarita Magazine has grown with the Santa Clarita Valley since 1990 and become the #1 place to advertise locally.

SANTA CLARITA MAGAZINE

PO Box 801570
Valencia Ca 91380

For Advertising information
Call or Text:
1 (661) 294-4444

Santa Clarita Magazine

Santa Clarita Magazine