Reply to exceeding $19,000 gift limit

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The drawback is that it will eat into your estate tax exemption when you die. It's better to start giving maximum gift amounts to your children once they have proven themselves to be ready to receive them. It's impossible to know for sure when that is and things can change at any time, but around college age, you can tell if your kid is likely to spend everything immediately or use the funds responsibly. If you start when then are 19 or 20, you can begin to build their accounts for 5-8 years before they are ready to spend on things like a house, childcare, work break to raise children, or whatever. Five years at the maximum from two parents will come to around $200,000 by the time they are 25--and that doesn't include any returns on those funds.

That's our plan. I am not thinking we will exceed inflation adjusted $30M at death, but I don't want the hassle of tracking overages until then. If I were going to do that, I would give $1-2M and make it very meaningful.

NW = $9M in early 50s; not yet retired.[/quote]

You can start before that by putting the money into trust.  That's what we're doing.  [/quote]

How does putting money into trust avoid the estate tax? Unless it's an irrevocable trust, it's still a gift. And irrevocable trusts have their own tax problems. Lots of people want to believe that trusts are a great answer, but I've not found that to be the case.[/quote]

We paid gift tax up front to fund irrevocable trusts. They can grow tax free now though the beneficiary will pay income tax on the distributions.[/quote]

That would have to be a huge gift to actually owe gift tax.  But it's certainly a decent strategy to make a lifetime gift, which reduces your ultimate estate because the appreciation on the assets won't be part of your estate.[/quote]

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