by Elizabeth D. Spilotro
As 2011 comes to a close, consider three options to reduce your overall estate and minimize tax impact:
- The 2011 annual exclusion gift amount remains $13,000 for individuals ($26,000 for married couples filing jointly, using gift splitting). This means you can gift up to that amount to anyone and as many people as you wish. Annual exclusion gifting is a nice way to remove assets from your estate and pass them to your loved ones.
- Keep in mind that direct payments made for medical and educational expenses do not count as gifts. Paying for a grandchild’s braces or school tuition (at any level) can be a nice way to reduce your estate and ease financial pressure for family members. Note: you have to make the payment directly to the medical service provider or the educational institution!
- Tax provisions permitting direct charitable gifts from IRAs are set to expire on December 31, 2011. If you are 70 ½ or older, you can direct your IRA custodian to make a direct gift up to $100,000 to a qualified charity (generally a public charity). You will not receive a charitable deduction for the donation, but the contribution will count toward your required minimum distribution, but the distribution will not count toward your annual income. In other words, redirecting part or all of an IRA distribution that you are required to take but don’t actually need can benefit a charity of your choice as well as your tax bill.