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Gifts might help you reduce the value of your estate

Making sure that your loved ones get the most that they can out of your estate is a concern of many people. For some people, there aren't any huge considerations here because they don't have massive estates. The issue comes into the picture when you have to try to reduce the size of your estate so that a hefty portion of the estate won't go toward taxes.

When it comes to the size of the estate, federal taxes kick in for estates that are valued at $5.49 million or more. If your estate is at or near this, you might need to reduce the value. One legal way to do this is by giving gifts while you are alive. You have to make sure that these gifts are done in a legal manner.

In 2017, the limit for what you can legally give away is $14,000 per person per year. This means that you can give out $14,000 to each family member you have to try to reduce the size of your estate. Your gifts aren't limited only to family members. You can also give gifts to friends. As long as the gift is under $14,000 for the year, no gift tax will apply.

If you are married, you have an advantage here. You and your spouse can each give a gift of up to $14,000 per person, which means that each person could receive a total of $28,000 per year as long as you give no more than $14,000 and your spouse gives no more than $14,000.

There are several considerations that you have to think about when you are trying to reduce the value of your estate. Make sure that you find out what you can legally do so that you can maximize what your loved ones are able to get when you pass away.

Source: FindLaw, "Reducing Estate Tax - Gifts," accessed Aug. 03, 2017

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