What to Know About the Increase in Annual Gift Tax Exclusion in Pennsylvania

What to Know About the Increase in Annual Gift Tax Exclusion in Pennsylvania

If you are interested in learning more about the increase in the annual gift tax exclusion, read on and reach out to our firm today to discuss the details of your case with our dedicated and experienced PA wills, trusts & estates attorneys today.

What is the increase in annual gift tax exclusion?

In 2022, the annual exclusion for federal Gift Taxes was raised to $16,000 per individual yearly. Even though a near-universal approval exists that gift-giving can play an important role in estate planning, a person should consider a number of issues before making gifts.

The way that gifts are made can have a significant effect on beneficiaries. This is especially accurate if the party who accepts a gift is under the age of 21. Direct gifts made to young people can have their own challenges which involve exposure to creditors and limited control over how gifts are created. Because of this, it is a smart idea to consider placing gifts in a trust.

What are the risks behind direct gifts?

If you are gifting assets to a beneficiary, it can leave a gift vulnerable to several risks. Direct gifts are subject to any creditors trying to collect money from a beneficiary and can be at raised risk in the event of a divorce. If a beneficiary passes away and has an incomplete estate plan, unexpected beneficiaries could obtain these assets or other obstacles may arise.

To learn more about the impact this can have on your estate plan and future, it is in your best interest to reach out to our Pennsylvania estate planning attorneys. Our legal team is dedicated to ensuring you are making educated determinations to protect your and your family’s future.

How can I use custodial accounts?

If the individual receiving a gift is a minor, a custodial account can provide some assistance in construction. The extent of flexibility provided by custodial accounts, however, has its flaws. For example, oftentimes, when the subject of a custodial account reaches the age of 18 or turns 21, all assets in a custodial account, are immediately passed on to the recipient, which includes all investment and management choices. Once this happens, nothing prevents a recipient from wasting the custodial account or making rash investment choices. Another potential challenge is change in custodians following death or incapacity before a beneficiary reaches the age of 21.

CONTACT OUR EXPERIENCED PENNSYLVANIA FIRM

Friedman Schuman is an experienced and dedicated legal resource for clients throughout Pennsylvania. We proudly serve clients facing a wide range of legal matters. If you require the services of an effective attorney, please contact Friedman Schuman today to schedule a consultation.

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